BOARD MEETING
STATE OF CALIFORNIA
AIR RESOURCES BOARD
JOE SERNA, JR. BUILDING
CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY
CENTRAL VALLEY AUDITORIUM, SECOND FLOOR
1001 I STREET
SACRAMENTO, CALIFORNIA
THURSDAY, JULY 26, 2007
9:00 A.M.
TIFFANY C. KRAFT, CSR, RPR
CERTIFIED SHORTHAND REPORTER
LICENSE NUMBER 12277
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APPEARANCES
BOARD MEMBERS
Ms. Mary D. Nichols, Chairperson
Ms. Sandra Berg
Ms. Judith G. Case
Ms. Dorene D'Adamo
Mr. Jerry Hill
Mr. Ronald O. Loveridge
Mrs. Barbara Riordan
Supervisor Ron Roberts
Dr. Daniel Sperling
STAFF
Mr. Tom Cackette, Chief Deputy Executive Officer
Mr. Tom Jennings, Chief Counsel
Mr. Michael Scheible, Deputy Executive Officer
Ms. Lynn Terry, Deputy Executive Officer
Ms. Kathleen Quetin, Ombudsman
Ms. Lori Andreoni, Board Secretary
Ms. Nargis Ahmed, Population Studies Section, Research
Division
Mr. Tony Brasil, Manager, In-Use Control Measures Section,
MSCD
Mr. Bob Cross, Chief, Mobile Source Control Division
Ms. Kim Heroy-Rogalski, Staff Air Pollution Specialist,
In-Use Control Measures Section, MSCD
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APPEARANCES CONTINUED
STAFF
Mr. Mike Terris, Senior Staff Counsel
Ms. Barbara Weller, Manager, Population Studies Section,
RD
Mr. Erik White, Chief, Heavy-Duty Diesel In-Use Strategies
Branch, MSCD
ALSO PRESENT
Mr. Gregg Albright, State Department of Transportation
Mr. James Atkins, Cobra Equipment Rental Company
Ms. Diane Bailey, NRDC
Mr. Bruce Balala, Bruce Balala Excavating
Mr. Bob Berlage, Big Creek Lumber
Mr. Harvey Beigle, Reed Thomas Co., Inc.
Ms. Ina Bendich, Summer Internship
Ms. Amber Bishop, Summer Internship
Mr. Geoff Boraston, Granite Construction, Inc.
Mr. Skip Brown, Delta Construction Co.
Mr. Peter Bruenke, Huss LLC
Mr. Tim Byrne, Richie Brothers Auctioneers
Ms. Brittney Collins, Summer Internship
Mr. Howard Cooper, Cooper Crane Rigging
Mr. Ted Costa, People's Advocate
Mr. Daniel Curtin, California Conference of Carpenters
Mr. William Davis, Southern California Contractors
Association, Inc.
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APPEARANCES CONTINUED
ALSO PRESENT
Mr. Gordon Downs, Downs Equipment Rental
Mr. Sean Edgar, Clean Fleets Coalition
Mr. Jose Escobedo, R&L Brosamer, Inc.
Mr. Dan Fauchier, EGCA
Ms. Donna Fox, CA Nurses Association
Mr. Shane Gara, Camarillo Engineering, Inc.
Mr. Travis Hagen
Ms. Brittnie Hamilton, Summer Internship, Rose Foundation
for Communities and the Environment
Mr. Adam Harper, California Construction and Industrial
Materials Association
Mr. Jessica Henn, RAMP and CAFA
Supervisor Sue Horne, Regional Council of Rural Counties
Mr. Robert Ikenberry, California Engineering
Mr. Doug Jeffe, Transportation California
Ms. Irfana Khan, Summer Internship
Mr. Andy Katz, Breathe California
Ms. Kerry Lawrence, Golden Interstate Sweeping
Ms. Jackie Le, Summer Internship
Ms. Katie Lefkowitz, Union of Concerned Scientists
Mr. Jonathan Lewis, Clean Air Task Force
Mr. Michael Lewis, Coalition to Build a Cleaner California
Mr. Dave Louden, California Professional Association of
Specialty Contractors
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APPEARANCES CONTINUED
ALSO PRESENT
Mr. Joe Lyou, South Coast AQMD
Mr. Steven Matich, Matich Construction
Mr. Richard McCann, Ph.D., Construction Industry Air
Quality Coalition
Mr. Rick McCourt, Sukut Construction, Inc.
Ms. Christina McGee, Summer Internship
Mr. Scott Molloy, BIA San Diego
Ms. Ashley Nathaniel, Summer Internship
Mr. Gregg Oxley, Allen A. Waggoner Contractor
Ms. Tiana Pittman, Summer Internship
Ms. Kathleen Phillips, Environmental Defense
Ms. Mary Pitto, Regional Council or Rural Counties
Mr. David Porcher, Camarillo Engineering, Inc.
Mr. Guy Prescott, Operating Engineerngs Local 3
Mr. Bradley Reed
Mr. Bob Roberts, California Ski Industry
Mr. Lowell Robinson
Mr. Gary Rohman, Heavy Construction Equipment Rentals
Mr. Seyed Sadredin, San Joaquin Valley APCD
Mr. Mike Self
Ms. Carolina Simunovic, Fresno Metro Ministry Central
Valley Air Quality Coalition
Ms. Katie Stevens, Office of Community and Economic
Development
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APPEARANCES CONTINUED
ALSO PRESENT
Mr. Ted Stevens, Blue Mountain Minerals
Mr. Richard Taliaferro
Mr. James Thomas, Nabors Well Services Co.
Mr. Ed Walker, Robinson Enterprises, Inc.
Mr. Mike Whalen, Ferma Corp.
Ms. Linda Weiner, ALA
Mr. John Williams, Pipeline Contractors, Inc.
Ms. Danyale Willingham, Summer Internship
Ms. Becky Wood, Teichert
Mr. Joshua Wood, Sacramento Builder's Exchange
Mr. David Yow, representative for Assembly Member JOel
Anderson
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INDEX
PAGE
Pledge of Allegiance 1
Item 7-8-1
Chairperson Nichols 1
Acting Executive Officer Cackette 4
Staff Presentation 5
Q&A 9
Item 7-5-6
Chairperson Nichols 10
Acting Executive Officer Cackette 12
Staff Presentation 16
Ombudsman Quetin 53
Q&A 54
Mr. Yow 86
Mr. Gara 88
Mr. Porcher 89
Mr. Byrne 95
Mr. Prescott 100
Mr. Self 103
Mr. Downs 105
Supervisor Horne 116
Ms. Pitto 121
Mr. Beigle 122
Mr. Albright 125
Dr. Lyou 128
Mr. Sadredin 131
Mr. Edgar 134
Ms. Lefkowitz 138
Ms. Fox 140
Mr. Katz 142
Mr. Matich 146
Ms. Hamilton 150
Ms. Le 151
Ms. Khan 152
Ms. McGee 154
Ms. Collins 156
Ms. Pittman 158
Ms. Bishop 159
Ms. Nathaniel 160
Mr. Wood 162
Mr. Walker 165
Mr. Roberts 166
Ms. Bailey 170
Mr. Lewis 172
Ms. Stevens 175
Mr. Robinson 176
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INDEX CONTINUED
PAGE
Mr. Bruenke 177
Mr. Ikenberry 188
Mr. Berlage 190
Mr. Curtin 193
Ms. Simunovic 196
Ms. Henn 200
Mr. McCann 201
Mr. Rohman 207
Mr. Williams 209
Mr. Fauchier 213
Mr. Davis 215
Mr. Molloy 216
Mr. Lewis 220
Mr. Brown 229
Mr. Balala 239
Mr. Whalen 242
Ms. Phillips 245
Ms. Weiner 248
Mr. Oxley 252
Mr. Thomas 255
Mr. Boraston 258
Mr. Stevens 262
Ms. Wood 264
Mr. Louden 267
Mr. Wilkie 274
Mr. Costa 276
Mr. Kelter 278
Mr. Lassen 279
Mr. Atkins 282
Mr. Aguilera 283
Mr. Anair 285
Mr. Jeffe 288
Mr. Hogo 289
Q&A 294
Ex Parte 296
Motion 310
Vote 358
Vote 359
Adjournment 359
Reporter's Certificate 360
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1 PROCEEDINGS
2 CHAIRPERSON NICHOLS: Good morning, ladies and
3 gentlemen. I know there's still people trying to get into
4 the room, but it looks like we've got a more than critical
5 mass of people here already, so I think we should get
6 started.
7 I'm going to call the meeting to order. My name
8 is Mary Nichols, and I'm the new incoming Chairman of the
9 Board. I think the other Board members -- do we have our
10 names up so people can see who we are? So the audience
11 will know who we are?
12 We will begin then with the Pledge of Allegiance
13 before we do anything else. Please join me.
14 (Thereupon the Pledge of Allegiance was
15 recited in unison.)
16 CHAIRPERSON NICHOLS: Thank you.
17 The Clerk will now call the roll.
18 SECRETARY ANDREONI: Ms. Berg?
19 BOARD MEMBER BERG: Here.
20 SECRETARY ANDREONI: Supervisor Case?
21 BOARD MEMBER CASE: Here.
22 SECRETARY ANDREONI: Ms. D'Adamo?
23 BOARD MEMBER D'ADAMO: Here.
24 SECRETARY ANDREONI: Dr. Gong?
25 Supervisor Hill?
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1 SUPERVISOR HILL: Here.
2 SECRETARY ANDREONI: Ms. Kennard?
3 Mayor Loveridge?
4 BOARD MEMBER LOVERIDGE: Here.
5 SECRETARY ANDREONI: Supervisor Roberts?
6 BOARD MEMBER ROBERTS: Here.
7 SECRETARY ANDREONI: Mrs. Riordan?
8 BOARD MEMBER RIORDAN: Here.
9 SECRETARY ANDREONI: Professor Sperling?
10 BOARD MEMBER SPERLING: Here.
11 SECRETARY ANDREONI: Chairman Nichols?
12 CHAIRPERSON NICHOLS: Here.
13 CHAIRPERSON NICHOLS: Ms. Chairman, we have a
14 quorum.
15 CHAIRPERSON NICHOLS: Thank you.
16 I would just note that one of our Board members
17 is not with us this morning. Dr. Henry Gong was
18 hospitalized earlier in the week. We believe he is going
19 to make a full recovery. And we've been in touch with
20 him. But he sends his regards to the Board, and we all
21 wish him the very best for a speedy recovery.
22 I have a couple of general sort of housekeeping
23 announcements that I need to make.
24 First of all, there is an item on our agenda
25 called a closed session which is routinely put on the
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1 agenda in order to receive reports on litigation to which
2 the Board is a party. However, since there is no report
3 on any litigation items, there will not be a closed
4 session. So that session is canceled.
5 If there's anyone in the audience who wishes to
6 testify, you need to make sure you have signed up with the
7 Clerk of the Board. And if you wish to do so, we would
8 appreciate it, but it's not required, it's good to include
9 your name on the speaker card.
10 Also we will be imposing a time limit on speakers
11 this morning. Based on the importance of the rule and the
12 size of the group which is to testify, we are going to
13 impose a three-minute limit on individual speakers. If
14 you're part of an organized group that wishes to group
15 your time together, please let me know or let the Clerk
16 know at the beginning so we can try to organize that and
17 make sure that people are grouped together whose comments
18 are to go together.
19 It's easier for the Board to follow your
20 comments, if you haven't been to one of these meetings
21 before, if you will go straight to your principle points.
22 And you also don't need to read your written
23 testimony if you've prepared written testimony. We can
24 read faster than we can listen or than you can talk. And
25 your comments will go straight into the record of the
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1 hearing. They will be included in the record regardless.
2 I also need to point out to you for safety
3 reasons that there are emergency exists at the rear of
4 this room. In the event of a fire alarm, which we're not
5 expecting, but if one should happen, we're required to
6 evacuate this room immediately and go downstairs and out
7 of the building and not return until the all-clear signal
8 is given. That's part of the routine procedures I need to
9 tell everybody about.
10 We have this morning -- we're beginning I guess
11 as has become a custom now and a very good custom here
12 with a report, which is a monthly health update. It's
13 going to be a report on findings of a new study on the
14 health effects of short-term exposure to fine particulate
15 matter in individuals with coronary artery disease. And
16 this is obviously useful information for the Board to have
17 to keep in the back of our minds as we go about our
18 business.
19 But I hope it's going to be of interest to the
20 audience as well. If nothing else, it's a reminder of why
21 we're here and why we do the work we do here at the Air
22 Resources Board. Tom Cackette, our Acting Executive
23 Officer, will introduce this item.
24 ACTING EXECUTIVE OFFICER CACKETTE: First, on
25 behalf of the staff, let me welcome you, Chairman Nichols,
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1 to the first Board meeting at least of the 21st century.
2 I know you've been here before in the past.
3 Getting to the item here, scientists have
4 demonstrated that long-term exposure to particulate matter
5 air pollution is associated with cardiovascular disease
6 and mortality. Two of these studies were previously
7 presented to the Board, the American Cancer Society's
8 study which found an association between long-term
9 exposure to fine particle matter and increased mortality
10 particularly from cardiovascular causes, and the Women's
11 Health Initiative Study, which detected an even greater
12 association for postmenopausal women.
13 In contrast, the study we will discuss today
14 provides evidence that short-term exposure to fine
15 particle matter may also increase the risk of
16 cardiovascular events. The results of this research
17 supports the need for a short-term PM2.5 ambient standard
18 and other strategies for controlling fine particles to
19 provide greater protection of public health.
20 Ms. Nargis Ahmed from our Health and Exposure
21 Branch will make the staff presentation.
22 (Thereupon an overhead presentation was
23 presented as follows.)
24 MS. AHMED: Thank you, Mr. Cackette. Good
25 morning, Chairman Nichols and members of the Board.
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1 Today's health update will focus on the results
2 of a new study that evaluates the relationship between
3 short-term exposure and PM2.5 air pollution and
4 cardiovascular events in patients with coronary artery
5 disease.
6 CHAIRPERSON NICHOLS: Excuse me. If you could
7 speak more loudly. Maybe put the microphone a little
8 closer to you, I think it would help. Thank you.
9 --o0o--
10 MS. AHMED: In past health updates, we have
11 highlighted the consistent association between particulate
12 matter exposure and adverse health effects.
13 Evidence was presented which suggests that
14 long-term exposure to particulate air pollution
15 contributes to inflammation, progression of
16 atherosclerosis, or hardening of the arteries, and the
17 risk of heart disease and death.
18 Short-term ambient PM2.5 exposure has been
19 associated with atherosclerosis complications and
20 aggravation of heart disease, including hospital
21 re-admission in heart attack survivors which can lead to
22 premature death.
23 This hypothesis tested in this study was that
24 short-term exposures can contribute to heart attacks and
25 other coronary events, especially among patients with
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1 underlying coronary artery disease.
2 --o0o--
3 MS. AHMED: The study being highlighted today is
4 titled "Ischemic Heart Disease Events Triggered by
5 Short-Term Exposure to Fine Particulate Air Pollution,"
6 published in November 2006.
7 The investigators analyzed the relationship
8 between PM2.5 and heart disease events in almost 13,000
9 patients who lived in Utah for ten years.
10 Heart disease events were defined as unstable and
11 stable heart associated chest pain and initial and
12 subsequent heart attack. The investigators provided
13 detailed information on a number of health variables,
14 including information on the number of severely diseased
15 coronary arteries in each participant.
16 --o0o--
17 MS. AHMED: This study found a 4.5 percent
18 increase in risk of acute heart disease events associated
19 with each 10 micrograms per cubic meter increase in
20 ambient PM2.5. The events that were significantly
21 associated with PM2.5 were unstable heart associated chest
22 pain and heart attacks. The strongest associations were
23 with exposures on the same day or an average of the
24 previous two days prior to the onset of the coronary
25 event.
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1 Effects were larger for patients with unstable
2 heart disease. Age, gender, smoking, and body mass index
3 had no influence on the risk level.
4 Significant PM2.5 effects estimates were observed
5 for individuals who had at least one severely diseased
6 coronary artery compared with those who did not.
7 --o0o--
8 MS. AHMED: In summary, the study highlighted
9 today suggests that reducing ambient levels of PM2.5 can
10 reduce the number of heart attacks, particularly in areas
11 of California where the exposure to PM2.5 can be
12 significant. For example, the monitored data from ARB
13 shows that 48 days in the South Coast and 57 days in the
14 San Joaquin Valley air basins were above the national
15 PM2.5 standard in 2006.
16 A major goal of ARB's regulatory program is to
17 reduce PM2.5 pollution, including particulates from diesel
18 engines. The information in this study supports the
19 Board's regulatory activities and policy decisions that
20 affect the health of Californians and illustrates the need
21 to continue progress in PM2.5 reductions toward attaining
22 the 24-hour standard.
23 This concludes my presentation. We will be happy
24 to answer any questions. Thank you very much.
25 CHAIRPERSON NICHOLS: Thank you for your
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1 presentation.
2 Do any Board members have any questions they
3 would like to ask about this study?
4 I would just ask the question, since it always
5 comes up in my experience in debates about health effects
6 research, what you can tell us about this study that
7 you're reporting on here today? Who was it funded by and
8 was it part of a bigger study? And what's the context
9 here?
10 POPULATIONS STUDIES SECTION MANAGER WELLER: This
11 was a study of individuals who all underwent a certain
12 medical procedure. So the group of people they got
13 together had all undergone cardiac catheterization. So
14 they knew they were all either people who had been
15 diagnosed with heart conditions or had concern about their
16 previous heart conditions.
17 The source of funding for this was from funds
18 from the Mary Lew Fullerton Professorship. And the study
19 took place through Brigham Young University, because the
20 study as you know took place in Utah.
21 The one thing about this cohort is they will be
22 continuing to look at these individuals and try to look at
23 one of the things they were not able to look at in this
24 study, which is, is there more of an effect on the high
25 air pollution days versus the lower air pollution days.
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1 In this study, they were looking at more of an
2 average exposure so they want to look at the peaks versus
3 the average. So that is something that's going to
4 continue with this cohort.
5 CHAIRPERSON NICHOLS: Well, obviously the health
6 effects they were looking at here, which is heart attack,
7 is a very serious health effect. So those numbers are
8 actually quite dramatic.
9 POPULATIONS STUDIES SECTION MANAGER WELLER: Yes,
10 it is. And I think one of the things to understand about
11 this study as opposed to a lot of studies that look at
12 cardiac effects is they were able to look at the severity
13 of disease these individuals had and were able to
14 correlate the fact that the people who had more severe
15 disease do have more severe effects. I think that's very
16 important.
17 CHAIRPERSON NICHOLS: Great. Thank you very
18 much.
19 We now will move on because there's no -- oh, I'm
20 sorry. If there's any public comment or public testimony
21 on this item, is there anybody who was signed up? No.
22 Okay. Thank you.
23 We'll then move on to our consideration of the
24 proposed regulation for in-use off-road diesel vehicles.
25 This is a matter which is continued from the May Board
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1 meeting in San Diego, during which the staff summarized
2 the regulation and its costs and benefits.
3 I have had an opportunity to review the
4 transcript and testimony from the San Diego hearing. So
5 I'm happy to say I will be able to participate in this
6 deliberation.
7 This is a proposal that affects many people and
8 fleets of vehicles. But it also achieves more emissions
9 reductions than all of the other diesel toxics air control
10 measures than this Board has previously approved put
11 together. So we recognize that this has both major impact
12 and major benefits potentially.
13 And I understand that the proposal has been
14 designed to meet the goals of the Board's Diesel Risk
15 Reduction Program as well as the State Implementation
16 Plans from the South Coast and the San Joaquin Valley,
17 which are relying on the Board to fill in this area of
18 regulation as part of their plan to attain the air quality
19 standards.
20 Since the May Board meeting, several Board
21 members and staff have visited with representatives of
22 affected fleets to hear their concerns and to better
23 understand and discuss the cost issues. And I want to
24 thank those Board members who took the extra time and made
25 the effort to go out and meet with our constituents and to
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1 learn more about what this rule may do. I think that's
2 going above and beyond what's necessarily required. But
3 it's clearly I think appropriate under the circumstances.
4 I'm also encouraged that since May the staff has
5 worked with the South Coast and San Joaquin districts as
6 well as with industry for looking for ways in which they
7 could achieve additional emissions benefits and make the
8 rule as workable and efficient and cost effective as
9 possible.
10 At some point or another I guess we're all going
11 to be asked to disclose our ex parte communications. Do
12 we do that at the beginning or the end? At the end.
13 Thank you.
14 I'm particularly grateful to have our four time
15 Acting Chairman sitting here on my left to put me back on
16 track if I go astray here. Thank you.
17 So before we proceed, is there any further
18 discussion or hearing? I'll ask our Executive Officer to
19 introduce this item, Mr. Cackette.
20 ACTING EXECUTIVE OFFICER CACKETTE: Thank you,
21 Chairman Nichols.
22 At the May Board meeting, staff presented a
23 proposal to reduce the health damage caused by the
24 emissions of 180,000 in-use off-road diesel engines used
25 in construction and other non-agricultural activities in
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1 California. These vehicles are responsible for nearly a
2 quarter of the diesel PM emissions and nearly a fifth of
3 the oxides of nitrogen emissions from mobile diesel
4 engines.
5 Diesel PM is listed by the Board as a toxic air
6 contaminant. Diesel PM and NOx emissions increase ambient
7 concentrations of PM2.5, while NOx emissions also lead to
8 more ozone formation.
9 The proposed regulation before you today will
10 reduce both PM and NOx emissions. It will exceed the goal
11 of reducing diesel emissions by 85 percent set forth in
12 the Board's Diesel Risk Reduction Program. The NOx and PM
13 reductions will help the South Coast and the San Joaquin
14 Valley Air Districts meet federally mandated deadlines for
15 ambient PM2.5 and ozone.
16 Since the May Board meeting, staff has worked
17 with stakeholders to further assess the impacts of its
18 proposal. We have held dozens of meetings, met with
19 individual companies to explore compliance options,
20 evaluated retrofit device installations, and analyzed
21 regulatory alternatives.
22 We have paid particular attention to the economic
23 impacts of our proposal having assessed cost estimates
24 provided by industry consultants, and evaluated the
25 economic impacts on individual businesses, many who
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1 testified at the May hearing.
2 We appreciate the willingness of the businesses
3 to discuss with us the economics and innerworkings of
4 their companies and thank those Board members who assisted
5 in our evaluation.
6 We held two additional workshops on economics to
7 ensure that all stakeholders could comment on our
8 findings. One of our major findings is that the use of
9 early action provisions or credits of the proposed
10 regulation helped smooth out and reduce costs in the
11 initial years of implementation. Staff will discuss this
12 further in its presentation.
13 As the Board may recall at the May Board meeting,
14 the South Coast District and San Joaquin Air Districts
15 both asked the Board to tighten the proposed rule to
16 achieve more NOx reductions. Discussions between the
17 South Coast District and the construction industry
18 identified a potential program to achieve greater NOx
19 reductions utilizing available incentive moneys. The San
20 Joaquin Valley District has also shown interest in such a
21 program.
22 Also since the Board meeting, the principle
23 construction industry trade group presented a proposal
24 that they indicated would achieve equivalent emission
25 reductions to the staff's proposal. Following much
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1 discussion, the staff and industry focused their attention
2 on an element of the industry proposal that reduces the
3 frequency of demonstrating compliance to every third year,
4 compared to the staff proposal of annual compliance
5 demonstrations.
6 Industry has argued that less frequent compliance
7 demonstrations provide additional flexibility allowing
8 them to choose the lower cost path to compliance.
9 Environmental groups have expressed concerns that
10 less frequent demonstrations of compliance will reduce the
11 health benefits of the proposed regulation by encouraging
12 companies to delay compliance.
13 We will share with you our quantification of how
14 much the industry proposal affects health benefits.
15 So where are we today? We have not been able to
16 achieve consensus on a package of amendments to revise the
17 staff's proposal. As a result, staff is recommending you
18 adopt the proposal we offered at the May hearing with a
19 few minor amendments. Regulatory language for the revised
20 staff proposal can be found on the back table or outside I
21 believe and was sent to our list serve and posted on our
22 website last night.
23 We are not making a recommendation on whether the
24 district-funded incentive program to increase NOx benefits
25 or an industry suggested program to allow fewer compliance
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1 demonstrations should be adopted. However, to help the
2 Board and the public better understand these two policy
3 choices, we have made available to the public a discussion
4 paper available in the back of the room or outside and
5 will provide additional comments on this issue during the
6 staff presentation.
7 I will now ask Erik White of the Mobile Source
8 Control Division to give staff's presentation.
9 (There upon an overhead presentation was
10 presented as follows.)
11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
12 WHITE: Thank you, Mr. Cackette. Good morning, Madam
13 Chairman and members of the Board.
14 At the May Board meeting, staff presented the
15 proposal in-use off-road diesel vehicle regulation in
16 detail, along with the need for its adoption, the process
17 by which it was developed, its cost and benefits, and a
18 number of issues about it raised by stakeholders.
19 Today, I will update the Board on the staff's
20 proposal, including discussing additional proposed
21 modifications, and discuss the efforts staff has
22 undertaken since that meeting to address issues that have
23 been raised.
24 --o0o--
25 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
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1 WHITE: Here's an outline of today's presentation. I will
2 begin with a short review of the proposed regulation and
3 its cost and benefits.
4 Then I will discuss staff's recent effort since
5 the May Board meeting to respond to issues that have been
6 raised. This will include responses to several questions
7 raised by Board members and witnesses.
8 I will update you on several proposals from
9 industry and air districts to change the regulation and
10 staff's analysis of these proposals.
11 Then I will go over staff's changes to the
12 original proposal.
13 Finally, I will conclude with staff's
14 recommendation.
15 --o0o--
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: The proposed regulation primarily targets two
18 pollutants: Diesel particulate matter and oxides of
19 nitrogen, or NOx. It is a crucial next step in
20 implementing the Diesel Risk Reduction Plan adopted by the
21 Board in 2000. It is also a major component of the State
22 Implementation Plans for both the South Coast and the San
23 Joaquin Valley, and will provide desperately needed short-
24 and long-term emission reductions in those areas, both of
25 which face rapidly approaching attainment deadlines for
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1 fine particulate matter and ozone.
2 Allow me to walk you through the proposed
3 regulation's main provisions.
4 --o0o--
5 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
6 WHITE: The regulation would apply to any mobile,
7 diesel-powered, self-proposed off-road vehicle 25
8 horsepower and up. It does not apply to portable
9 equipment or on-road vehicles.
10 The regulation would impose labeling and
11 reporting requirements beginning in 2009 as well as limits
12 on unnecessary idling.
13 Fleets would also be prohibited from adding the
14 dirtiest vehicles, commonly known as Tier 0 or
15 uncontrolled vehicles, to their fleets after 2009.
16 The control requirements would begin in 2010 for
17 the largest fleets and phase in over the next decade. The
18 requirements for medium fleets would begin in 2013 and
19 phase in through 2020. Those for small fleets would begin
20 in 2015 and phase in through 2025.
21 --o0o--
22 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
23 WHITE: In general, the proposed regulation would require
24 fleets to either meet NOx or PM fleet average targets, or
25 if they cannot or choose not to, to demonstrate a certain
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1 amount of annual progress in reducing emissions. This
2 required demonstration of annual progress is known as the
3 best available control technology, or BACT, requirement.
4 The BACT requirement provides a safety valve for
5 fleets that cannot meet the proposed fleet average
6 targets. In any year, fleets are never required to turn
7 over more than 8 or 10 percent of their horsepower, nor
8 retrofit more than 20 percent of their horsepower.
9 Fleets can chose among a number of different
10 options to comply with the proposed regulation, finding
11 the mix of actions that is most cost effective and
12 feasible for their particular situation. Fleets may
13 install PM and/or NOx retrofits, buy cleaner new or used
14 vehicles, replace old engines with cleaner ones. That is,
15 power and/or retire the dirtiest vehicles.
16 --o0o--
17 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
18 WHITE: The proposed regulation contains a number of
19 special provisions and compliance extensions to give
20 fleets more flexibility and address special situations.
21 Low-use vehicles, those used less than 100 hours
22 per year, would be subject only to labeling and reporting
23 requirements.
24 Vehicles in federal attainment areas that are not
25 upwind contributors to downwind non-attainment areas would
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1 be subject only to the PM portion of the regulation.
2 The regulation contains provisions such that
3 fleet owners are not penalized if there are manufacturer
4 delays in the availability of retrofits, new engines, or
5 new vehicles.
6 The regulation exempts certain vehicles from the
7 retrofit requirements. It does not require retrofit of
8 vehicles less than five years old. It never requires a
9 retrofit if there is none verified for the engine or if
10 one cannot be safely installed.
11 The regulation also exempt certain vehicles from
12 turnover requirements. It never requires any turnover of
13 small fleets. Similarly, public fleets in low population
14 counties are also exempt from all turnover requirements.
15 It also will not require turnover of a vehicle if
16 there is no repower or used replacement available. It
17 never requires turnover of a vehicle less than ten years
18 old, nor does it require turnover of vehicles that have
19 been recently retrofit.
20 --o0o--
21 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
22 WHITE: The public health impacts of the proposed
23 regulation are significant. The proposed regulation is
24 expected to prevent 4,000 premature deaths. This is
25 nearly double the total lives saved from all previous
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1 in-use diesel control measures approved by the Board
2 combined.
3 Those health benefits translate into dollar
4 savings as well, 18 to $26 billion in health care and
5 premature death costs.
6 The regulation would also achieve significant PM
7 benefits and achieve the 2020 goals of the Diesel Risk
8 Reduction Plan.
9 The regulation would reduce diesel PM by 6.9 tons
10 per day in 2015 and by 5.2 tons per day in 2020, which
11 represents a 60 and 74 percent reduction respectively
12 below the levels expected without the regulation.
13 The regulation would also reduce diesel NOx
14 emissions by 30 tons per day in 2015 and 48 tons per day
15 in 2020, which is a 13 and 32 percent reduction
16 respectively, below the levels we would expect without the
17 proposed regulation.
18 --o0o--
19 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
20 WHITE: Just as the overall benefits of the proposed
21 regulation are significant, so are the total costs. Staff
22 estimates the total costs of the proposed regulation are
23 between three and three and a half billion dollars. These
24 are large numbers. But to put them in perspective, the
25 cost imposed on the construction industry is equivalent to
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1 an increase of 0.3 percent per year in statewide
2 construction costs.
3 Another way of looking at this is that if higher
4 construction costs are passed onto new homes, staff
5 estimates the cost in the price of a $450,000 house might
6 increase by about a thousand dollars, thereby increasing
7 the average monthly mortgage payment by about $6.00. Also
8 the proposed regulation is within the cost effectiveness
9 range of previous measures approved by this Board.
10 --o0o--
11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
12 WHITE: Now that I've reviewed the proposed regulation and
13 its expected benefits and costs, I would like to brief you
14 on staff's efforts since the May 25th Board meeting.
15 First, to ensure interested parties were aware
16 the Board had continued consideration of the proposed
17 regulation today, earlier this month, staff mailed over
18 300,000 postcards to licensed contractors notifying them
19 of this hearing.
20 Also, since the May hearing, staff has continued
21 to meet with stakeholders, including individual fleets,
22 industry representatives, environmental organizations, and
23 local air districts to address the outstanding issues that
24 were raised.
25 --o0o--
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1 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
2 WHITE: In many of the written and verbal comments on the
3 proposed regulation, industry stakeholders have stated
4 that the proposed regulation would cost $13 billion, which
5 is much higher than staff's estimate of three to three and
6 a half.
7 Since the May meeting, staff has continued to
8 evaluate the sources of the discrepancy between the two
9 cost estimates. First, we received a copy of the model
10 developed by the industry to estimate the statewide costs
11 of the proposed regulation. Staff then reviewed the model
12 and met with industry representatives, the consulting
13 company that developed the model, Caltrans, and the
14 Business, Transportation, and Housing Agency to discuss
15 the differences in the methodologies used to estimate
16 costs.
17 Based on this evaluation, staff found that the
18 industry estimate is based on a baseline fleet turnover
19 rate that is too low and not supported by data used by
20 either ARB or the U.S. EPA to estimate off-road vehicle
21 populations, thereby contributing to an overestimation of
22 the regulation's cost.
23 Staff also found that the industry estimate had
24 incorrectly assumed no fleets would ever meet the proposed
25 fleet averages. Thus, under the industry model, all
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1 fleets would have to do the maximum turnover and
2 retrofiting each year throughout the life of the program.
3 Finally, staff found that the industry estimate
4 is predicated on the purchase of new vehicles only.
5 Whereby, a common industry practice is to purchase lower
6 cost used vehicles. Staff also believes that the new
7 vehicle prices used are quite a bit higher than is
8 realistic.
9 Staff believes these effects alone can explain
10 over $8 billion of the difference, and that staff's
11 original estimate of three to three and a half billion is
12 still the best estimate of total statewide cost.
13 In order to share these findings with
14 stakeholders, staff held a public work group meeting on
15 June 18th to review staff's cost estimate methodology and
16 share the explanation for the findings I have just
17 discussed.
18 --o0o--
19 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
20 WHITE: In addition to evaluating the total statewide
21 costs, staff continued to conduct further analysis of the
22 financial impact of the proposed regulation on individual
23 fleets and the options available to these fleets to
24 minimize this impact.
25 In our analysis, staff confirmed, as many fleets
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1 have testified, that the cost in the first few years of
2 compliance with the regulation can be significant. These
3 initial costs are typically driven by the retrofit
4 requirements of the regulation in the early years.
5 However, staff also found that these early costs
6 can be significantly lowered and defrayed by taking
7 advantage of the proposed regulation's early credit
8 provisions typically through the use of retrofits or
9 repowers or a combination of both.
10 As staff met with fleets, we found a majority of
11 the fleets we talked to either already have or are
12 planning on taking advantage of these early credit
13 provisions.
14 But even with the early credit, many fleets will
15 still need to secure financing to spread the cost of
16 compliance out. Most fleets we spoke with already borrow
17 money to purchase vehicles, typically with a loan period
18 of two to five years. And most fleets will need to pass
19 on costs to their customers by bidding higher on jobs.
20 As staff looked in more detail at the CARB flow
21 implications of compliance with the proposed regulation,
22 staff found that the accelerated turnover costs that the
23 regulation imposes are often offset by other cost saving
24 considerations. Put another way, there are real cost
25 benefits to having newer vehicles. Newer vehicles have
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1 lower repair costs. They are more reliable and can often
2 raise productivity and income.
3 Also, when companies buy newer vehicles, they can
4 deprecate them, which leads to considerable tax
5 advantages.
6 Like staff's evaluation of the statewide costs,
7 so staff can share their findings with all stakeholders,
8 we held a public workshop meeting on July 16th to discuss
9 the individual fleet impacts.
10 --o0o--
11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
12 WHITE: Now that I've discussed the main findings of our
13 continued fleet analysis, I would like to talk in more
14 detail about some of the fleets we met with and evaluated.
15 Since the May meeting, staff met with and performed
16 detailed analysis on nine fleets. These nine fleets
17 included rental, general construction, and mining fleets,
18 and were geographically located throughout the state. We
19 found that six of the nine already had early credits,
20 primarily through engine repowers.
21 Staff requested financial information from each
22 of these fleets, and four of the fleets opened their books
23 to us. Staff would like again to thank these fleets for
24 their openness in allowing us to understand the proposed
25 regulation's financial impacts on them.
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1 --o0o--
2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
3 WHITE: There were several common themes in the meetings
4 we had with these nine fleets. First, the fleets were
5 concerned regarding the level of capital investment
6 required under the regulation in the first two to three
7 years.
8 Fleets were also concerned about their ability to
9 pass their costs on to their customers. In particular, in
10 years when the requirements for medium and large fleets
11 differ, large fleets were concerned about their ability to
12 bid higher without losing business.
13 Many fleets were concerned about PM retrofit
14 technology and in particular its availability and
15 feasibility, especially for older high horsepower
16 vehicles.
17 Fleets were concerned regarding the small number
18 of retrofit systems currently verified. As I will discuss
19 later, staff believes that more retrofit systems will be
20 available in the marketplace in the near future and is
21 working hard towards that end.
22 --o0o--
23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
24 WHITE: Staff performed a detailed cash flow analysis for
25 the four fleets who shared their financial data. The goal
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1 was to gauge the affordability of the regulation for these
2 fleets.
3 After performing our analysis, staff found that
4 the four fleets analyzed could absorb the cost of the
5 regulation, bringing them to less than a 10 percent impact
6 on net income, with price increases of less than one
7 percent. However, if these fleets didn't increase their
8 prices, the cost of the regulation could be up to 20
9 percent of their average net income. Clearly, these
10 fleets will need to find ways to pass through these costs.
11 I would now like to discuss the four fleets in
12 more detail. Because one of the fleets testified at the
13 May hearing, I will speak about them by name. The other
14 fleets have requested to remain anonymous.
15 --o0o--
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: First, I'd like to talk about Downs Equipment
18 Rentals, a rental fleet from Bakersfield. As the Board
19 may recall, Downs Equipment testified that they estimated
20 the proposed regulation's cost to be more than $2 million
21 per year and expressed concerns that such costs would be
22 unbearable for their company, which has only $1 million in
23 annual profits. However, they testified as well that the
24 cost of $400,000 per year would be manageable.
25 Since the Board meeting, the Downs family has
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1 graciously spent a lot of time with ARB staff and has been
2 open in sharing their company's information, and we are
3 very appreciative of their openness.
4 In meeting with them, staff explored a number of
5 potential compliance alternatives, including the use of
6 early credit provisions of the regulation for both
7 retrofits and repowers, opportunities to utilize financing
8 to bridge the higher cost of compliance year to year in
9 which the compliance costs are not so great and the
10 ability to realize higher rental rates.
11 --o0o--
12 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
13 WHITE: Perhaps the best way to show how incorporating
14 these compliance options can reduce the economic impacts
15 of the proposed regulation is to compare potential costs
16 for two compliance scenarios.
17 This slide shows the compliance assumptions which
18 were the basis for the cost estimates Downs Equipment
19 Rental shared at the May meeting. The vertical axis is
20 the number of actions, such as retrofits or equipment
21 turnover, that leads to compliance with the proposed
22 regulation.
23 As you can see, this strategy is comprised of 20
24 percent of their fleet being retrofit in each of the first
25 three years. And essentially the fleet is undergoing the
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1 maximum amount of turnover required each year through
2 2021. The capital costs associated with this strategy
3 could well be over $2 million in each of the first three
4 years as reported by Mr. Downs.
5 --o0o--
6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
7 WHITE: However, when alternative compliance options are
8 utilized, staff found that this same fleet could
9 significantly spread out their costs by utilizing the
10 early credit provisions of the regulation.
11 Using one potential alternative, Downs Equipment
12 could repower 7 percent of its horsepower to Tier 1 in
13 2008 and install PM retrofits on these same engines. They
14 could also replace their oldest vehicles with cleaner used
15 vehicles and install PM retrofits on their dirtier engines
16 first. If these action were taken --
17 MR. DOWNS: May I be recognized? Chair, may I be
18 recognized?
19 CHAIRPERSON NICHOLS: Excuse me, sir. Can you
20 wait until the end of the presentation?
21 MR. DOWNS: I don't think your mike is on.
22 CHAIRPERSON NICHOLS: You're right.
23 You're interrupting the presentation
24 MR. DOWNS: I know, but I'm Gordon Downs. I'm
25 the owner of Fleet A. Erik White is discussing our fleet.
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1 CHAIRPERSON NICHOLS: Why don't you come forward
2 and you can speak as soon as he finishs describing what he
3 believes he found. As soon as he finishs with just that
4 portion that relates to you, then I will recognize you.
5 MR. DOWNS: Fine. But the point is --
6 CHAIRPERSON NICHOLS: You're completely out of
7 turn, sir. Thank you.
8 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
9 WHITE: If these actions were taken, their compliance path
10 would look more like this.
11 As you can see, the big cost peaks in the early
12 years the have been smoothed out. Strategic utilization
13 of financing could further help defray these costs
14 overtime. Also helping the bottom line is the fact that
15 in this fleet, newer vehicles rent for more than older
16 vehicles, while depreciation also significantly reduces
17 the net annual cost of the replacement vehicles.
18 --o0o--
19 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
20 WHITE: Based an our analysis, staff believes with the use
21 of the alternatives discussed the company can remain
22 profitable in ever year. The net lose in profits on
23 average should be less than 5 percent of their after tax
24 income.
25 However, at the same time, this fleet will be
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1 acquiring newer vehicles which have lower repair costs and
2 can command higher rental rates. And the equity of the
3 company will increase as they add more valuable vehicles
4 to their fleet.
5 And while still significant, even in the highest
6 cost year, the proposed regulation's cost, that is the
7 impact on the company's cash flow, will still be less than
8 what the company indicated it could bear in terms of
9 compliance options.
10 And I'll pause at this time.
11 CHAIRPERSON NICHOLS: Thank you very much.
12 Mr. Downs obviously disagrees with something in
13 what you said, and he wants to speak right this minute.
14 So we're going to let him speak.
15 MR. DOWNS: I had a hard time sitting still in my
16 chair.
17 CHAIRPERSON NICHOLS: I understand.
18 MR. DOWNS: Mr. White is -- Erik White is a very
19 nice guy. You can't help but like him. My wife even said
20 that if she had a daughter, he's the kind of guy she'd
21 like her to grab onto.
22 (Laughter)
23 CHAIRPERSON NICHOLS: Something good could come
24 out of this regardless of what happens.
25 MR. DOWNS: So, Erik, believe me, it's not
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1 personal. It's just what staff has come up with.
2 First of all, he mentioned that we could afford
3 $400,000 a year, which would be manageable. I've tried to
4 explain to staff on several occasions -- and I don't know
5 if their particulate filter up here was gathering this
6 information. But I tried to tell them that all that
7 million dollars that we make after tax per year is already
8 obligated to purchasing late model high tier equipment.
9 You know that everybody in this room I believe
10 knows that principle payments can only be made with
11 after-tax money. Everybody follow that? So you have to
12 have after-tax money to make principle and interest
13 payments. All of that after-tax money is going to
14 purchase right now 16 late model high tier machines. Just
15 because this rule goes into effect, that doesn't mean we
16 have another $400,000 to comply with this regulation.
17 That's my point.
18 There isn't one member of staff that I know of
19 that has ever been in business. None of them have ever
20 owned a diesel machine.
21 Chair, I have a statement to make a little later
22 on, and I don't want to be using up my time. But I just
23 wanted to make the point that as we went through and heard
24 Erik White's presentation that we clarify some of these
25 things as we go. Because this is a long complex rule, and
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1 this one simple little point will just get lost in a pile
2 of other points if we don't make them as we go.
3 CHAIRPERSON NICHOLS: Mr. Downs, I don't think
4 we're going to continue this kind of back and forth
5 exchange.
6 But I appreciate the fact that you were both very
7 cooperative in terms of sharing data and that you're very
8 concerned about what you feel may be a misinterpretation
9 of the information that you shared. So for that reason,
10 we were happy to call on you. And I won't prevent you
11 from testifying later when it comes your time to testify.
12 MR. DOWNS: Thank you very much. I'll sit down.
13 (Applause)
14 CHAIRPERSON NICHOLS: All right.
15 --o0o--
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: Thank you, Madam Chairman. And thank you, Gordon,
18 for your words on our assessment.
19 Continuing with the presentation, this slide
20 summarizes the cash flow analysis for another fleet that
21 shared its fleet and financial data with us.
22 This fleet is a grading contractor in southern
23 California. This fleet starts out with an average age of
24 about 13 years, and over half of the vehicles are Tier 0.
25 This particular fleet has already repowered about 10
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1 percent of their horsepower.
2 Their revenue for the past four years has
3 averaged $15 million per year, with an after-tax income of
4 about half a million dollars per year.
5 Based on staff's analysis of the anticipated
6 compliance costs, we estimate that this fleet's net income
7 would drop by about 11 percent if no cost could be passed
8 on. However, this impact on net income could be lowered
9 by more than half if the fleet raised its prices by about
10 one percent. Staff believes this fleet would face
11 significant but not unbearable costs to comply with the
12 proposed regulation.
13 --o0o--
14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
15 WHITE: Here's a summary of our analysis for anther
16 grading contractor that shared its fleet and financial
17 data with us.
18 This fleet starts out with an average age of
19 almost ten years, and almost 30 percent of its vehicles
20 are Tier 0. They have already repowered about 30 percent
21 of their fleet. It's a somewhat bigger and newer fleet
22 than the one shown on the previous slide. The revenue for
23 the past four years has averaged $40 million per year with
24 an after-tax income of about $900,000 per year.
25 The average capital compliance costs for this
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1 fleet are about $700,000 per year. If none of these costs
2 could be passed on, the fleet's net income would drop
3 about 13 percent. However, similar to the previous fleet,
4 this impact on net income could be lowered to about 8
5 percent in the fleet could raise revenues by 1 percent.
6 Again, staff believes these represent significant but not
7 unbearable costs.
8 --o0o--
9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
10 WHITE: The final fleet that shared financial data with us
11 is an excavation contractor. Here's a summary of the
12 information that was shared with us.
13 This fleet starts out with an average age of ten
14 years and has 29 percent Tier 0 vehicles. They do not
15 have any early action credit.
16 The revenue for the past four years has averaged
17 $64 million with an after-tax about a million dollars per
18 year. The fleet's net income would drop about 8 percent
19 if no costs could be passed on. The impact on net income
20 could be eliminated if the fleet could raise revenue by 1
21 percent.
22 --o0o--
23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
24 WHITE: The last fleet I would like to talk about this
25 morning is Red Mountain Machinery, a rental firm in the
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1 San Diego area. As you may recall, Red Mountain testified
2 at the May meeting in San Diego.
3 At that meeting, Red Mountain testified that the
4 rule would cost them $23 million over four years. We
5 worked closely with Red Mountain over the past several
6 weeks to evaluate their fleet and better understand these
7 costs. In working with them, we learned that their $23
8 million estimate included costs for vehicles Red Mountain
9 would normally purchase. Red Mountain typically turns
10 over about 6 percent of its horsepower each year. So much
11 of the $23 million is turnover costs that would occur even
12 in the absence of the proposed regulation.
13 Also Red Mountain had assumed they would have to
14 control their whole national fleet. Red Mountain operates
15 vehicles in three states and only about 30 percent of
16 their horsepower resides in California on a regular basis.
17 The $23 million estimate included bringing
18 vehicles outside the state into compliance with the
19 proposed regulation. Where, in reality, Red Mountain
20 could comply by managing their fleet in such a way as to
21 ensure only their cleanest vehicles operated in the state.
22 If Red Mountain chooses not to bring their
23 cleanest vehicles to California, they could comply by
24 maintaining their normal turnover rate and installing
25 retrofits on their vehicles or by increasing their normal
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1 annual turnover rate from about 6 percent to about 7 1/2
2 percent.
3 Staff estimated that under either of these
4 scenarios their capital compliance costs would be no more
5 than 1.3 million for the purchase and installation of
6 exhaust retrofits, which is significantly less than the
7 $23 million estimate.
8 --o0o--
9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
10 WHITE: With industry's testimony at the May hearing that
11 our estimates of the statewide employment impacts of the
12 proposed regulation was too low, staff went back and
13 double checked our estimates. We found that with a more
14 careful calibration of the model used to estimate job
15 loss, known as eDRAM, that our estimates of job losses
16 should be higher and could be as high as 3400 in the worst
17 year. This higher estimate occurs if costs accrue to
18 those portions of the industry where employment is most
19 sensitive to regulation costs.
20 However, on average, we estimate that the
21 statewide employment impacts of the proposed regulation
22 are about 1,400 per year, still a factor of ten less than
23 the industry consultant estimates.
24 --o0o--
25 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
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1 WHITE: I would now like to take a few minutes to respond
2 to some questions and issues raised at the Board meeting.
3 --o0o--
4 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
5 WHITE: First, I would like to address the issues and
6 questions raised by members of Board.
7 After a witness pointed out that the majority of
8 the 200 fleets used by staff to predict the regulation's
9 emission benefits were public fleets, Supervisor Hill
10 requested staff to verify that an over-reliance on the
11 public fleet data did not skew our results. The witness
12 was concerned that public fleets might be much younger
13 than private fleets and therefore might have an easier
14 time complying with the regulation.
15 Staff re-evaluated our data and confirmed that
16 although most of the fleets in the 200 fleet sample were
17 indeed public, over 75 percent of this horsepower belonged
18 to private fleets. We also confirmed that the use of the
19 public fleets did not skew the age distribution of the
20 sample either.
21 This chart compares the age distribution from the
22 200 fleets used by staff to predict the regulation's
23 emission benefits to the private fleets contained in that
24 same sample. As you can see, the age distributions are
25 almost indistinguishable. In fact, while not shown on
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1 this graph, if anything, the public fleets were on average
2 slightly older than the private fleets used.
3 --o0o--
4 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
5 WHITE: Supervisor Hill also asked us to look into the
6 request from the US Navy to accept alternatives to the
7 required labeling of vehicles with an equipment
8 identification number. Staff met with the Navy and found
9 that the Navy's concern was that if their labels were
10 damaged or missing during an inspection by ARB enforcement
11 staff, that despite their best efforts to keep vehicles
12 labeled and reported properly, the military might be
13 subject to violations and fines.
14 After reviewing the Navy's concerns and meeting
15 with ARB enforcement staff, we concluded that discretion
16 already allows inspectors to not levy finds against fleets
17 that have just a few missing labels but that clearly have
18 made a good faith attempt to comply with the labeling
19 provisions.
20 Because existing ARB policy already seemed to
21 address this concern, staff does not propose to change the
22 labeling requirement out of concern that changing the
23 regulation could open a loophole for fleets to
24 intentionally fail to properly label and report their
25 vehicles.
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1 --o0o--
2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
3 WHITE: In addition, Supervisor Hill asked us to report
4 back on a request from some environmental groups that the
5 proposed regulation contain a sunset for the low-use
6 provision in 2020. A sunset would require these vehicles
7 be subject to the retrofit and turnover elements of the
8 regulation beginning in 2020. Staff reviewed our analysis
9 of low-use thresholds and still recommends maintaining the
10 exemption.
11 Staff found that controlling such vehicles is not
12 cost effective today and will still not be cost effective
13 in 2020. Exempting such vehicles does not sacrifice much
14 emission reductions, as they represent less than 3 percent
15 of the total emissions in 2020.
16 However, to address the concern that the low-use
17 exemption may provide a way to subvent the regulation,
18 staff is recommending a small change to the regulation by
19 adding a requirement that low-use vehicles report annually
20 indefinitely. This will add additional enforceability to
21 the regulation.
22 --o0o--
23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
24 WHITE: I would now like to address some of the issues
25 that were raised by witnesses at the May Board meeting.
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1 Many witnesses expressed concerns about PM retrofits. As
2 I've mentioned, the regulation will require nearly all
3 vehicles in the state to have such retrofits installed.
4 Witnesses were concerned about the availability of these
5 retrofits, their cost, and their durability.
6 Currently, there are only three level three
7 retrofit systems verified for off-road applications. All
8 three of these are actively regenerated systems and two
9 are systems that have to be periodically plugged into
10 electric power to be recharged, creating logistical
11 concerns.
12 Because of their added complexity, active systems
13 are more expensive than passive systems. Thus, some
14 quotes that fleets have received for installation of these
15 active systems, particularly for high horsepower vehicles,
16 are higher than the average retrofit costs assumed by
17 staff in our cost estimates.
18 Some witnesses were also worried that retrofits
19 may not hold up in the dusty construction environment.
20 They pointed to what was described and shown to the Board
21 as a poor installation of a HUSS particulate filter on a
22 loader in Fresno.
23 I would like to let the Board know staff has gone
24 and inspected this vehicle, and that while we agree it is
25 less than an optimal installation with some elements of
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1 the installation needing further attention, on the whole,
2 there was nothing about the installation that did not seem
3 correctable.
4 Now allow me to address some of the more specific
5 concerns regarding PM retrofit systems.
6 --o0o--
7 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
8 WHITE: First, it is important to know that although
9 retrofit diesel particulate filters are still emerging in
10 the off-road industry in the United States, the use of
11 particulate filters on diesel engines as a matter of
12 practice is becoming commonplace throughout the world.
13 Every new on-road engine sold in the US is now
14 required to have a particulate filter. In addition to
15 tens of thousands of installations on off-road equipment
16 in Europe, diesel particulate filters have been installed
17 on dozens of off-road construction vehicles throughout the
18 United States, and especially in New York and California.
19 To give a flavor for the types of off-road
20 retrofits that are being used today, I would now like to
21 share some photos of off-road retrofits that are
22 successfully operating in California today.
23 --o0o--
24 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
25 WHITE: Here are two pictures of a passively regenerated
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1 diesel particulate filter, one working on a wheel loader
2 and one on a scraper. Both of these vehicles are
3 currently in operation here in the state.
4 --o0o--
5 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
6 WHITE: Here are two more pictures of an installed
7 actively regenerated diesel particulate filter, one which
8 is periodically removed from the vehicle for regeneration.
9 These two vehicles are shown operating at L.A.
10 International Airport during the construction of a new
11 runway and have accrued thousands of hours operating at
12 the airport.
13 --o0o--
14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
15 WHITE: In order to achieve early emission reductions in
16 the South Coast, as well as spur the verification of new
17 off-road retrofit devices, ARB, the South Coast Air
18 Quality Management Districts, and the MSRC are working
19 together on an off-road showcase demonstration project.
20 Towards this program, the South Coast MSRC has committed
21 one million dollars in funding to the showcase with
22 district funding also committed.
23 One of the principle goals of the showcase is to
24 encourage verification of more off-road devices.
25 Seventeen manufacturers with 28 different devices have
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1 applied to participate in the program. The devices are
2 all level three and represent a mix of technologies, with
3 eight of the devices reducing NOx as well as PM.
4 Eighteen fleets have applied to participate. All
5 together, these fleets have 245 off-road vehicles. Staff
6 expects retrofits installed through the showcase to be
7 operating this fall.
8 In considering the retrofit provisions of the
9 regulation, staff is confident that retrofits are
10 technologically feasible and can be successfully
11 installed. However, staff has built provisions into the
12 regulation so that the regulation never requires the
13 impossible. That is, retrofits are not required if none
14 are verified or if they cannot be safely used.
15 --o0o--
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: Now, I'd like to describe several proposals that
18 staff has received requesting modifications to the
19 regulations. These proposals include recommendations and
20 comments from the Construction Industry Air Quality
21 Coalition, or CIAQC, and South Coast Air Quality
22 Management District, which I'll describe further in the
23 following slides.
24 A discussion of these proposals is provided in
25 the summary of key issues document which is available on
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1 the tables outside the hearing room and is part of the
2 Board's package.
3 --o0o--
4 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
5 WHITE: Earlier this morning, CIAQC proposed a major
6 change to the regulation, which they believe would achieve
7 emission reductions equivalent to the staff proposal.
8 Staff has reviewed CIAQC's proposal. And to summarize, it
9 would:
10 Provide that each fleet would have to achieve a
11 certain percent reduction off its own individual baseline;
12 Have no enforceable targets until 2015;
13 Re-define medium fleets as those up to 10,000
14 horsepower as opposed to the 5,000 horsepower definition
15 in the proposed regulation;
16 And re-define small fleets as those with up to
17 2500 horsepower as compared to the current proposed
18 definition of 1500.
19 --o0o--
20 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
21 WHITE: Staff has evaluated the July CIAQC proposal and
22 overall finds that it falls short of the emission benefit
23 parody it claims.
24 With no enforceable deadline until 2015, staff
25 could not be confident actions taken to reduce emissions
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1 would occur prior to then.
2 Also, the proposal's individual percent reduction
3 targets are problematic, because due to the nature of the
4 new engine standards, it would sometimes be impossible for
5 some fleets to meet the percent reduction targets because
6 cleaner new engines won't be produced.
7 After staff shared our concerns with CIAQC
8 regarding their proposal, CIAQC suggested maintaining the
9 structure of ARB's current proposal, but changing the
10 annual compliance dates from annual to triennial with the
11 first fleet average being effective in 2011.
12 --o0o--
13 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
14 WHITE: In considering opportunities for additional
15 flexibility in the proposed regulation, staff has
16 evaluated the idea of triennial targets as proposed by
17 CIAQC, instead of the annual targets that are in the
18 proposed regulation.
19 First, staff indicated to CIAQC that waiting
20 until 2011 for the first target was a de facto delay in
21 program startup and it would be necessary to have a 2010
22 compliance date.
23 Staff also indicated to CIAQC that triennial
24 targets without requirements for reasonable progress in
25 the intervening years would allow fleets to delay
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1 achieving reductions until the end of each three-year
2 period. Thus, triennial targets would sacrifice emission
3 benefits in the years where there is no target.
4 In response to this, CIAQC offered another
5 alternative that would ensure that 40 percent of the
6 benefits expected between any two compliance dates were
7 realized as reasonable progress. Staff has evaluated this
8 proposal and has concluded that it could result in a loss
9 of benefits of 12 percent relative to staff's current
10 proposal. This impact is shown graphically on the next
11 slide.
12 --o0o--
13 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
14 WHITE: This chart shows the cumulative benefits in
15 equivalent PM2.5 emission reductions, which are
16 proportional to health benefit. As you can see, the loss
17 in benefits if the rule were changed from annual to
18 triennial targets would translate to a 12 percent loss in
19 cumulative health benefits by 2015. This is a substantive
20 loss of benefit given the severity of the health impacts
21 of diesel exhaust.
22 --o0o--
23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
24 WHITE: At the May hearing, the South Coast and San
25 Joaquin Valley Air Districts testified that they would
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1 like the proposed regulation to achieve additional NOx
2 reductions prior to 2015. Such additional NOx reductions
3 would assist those districts in attaining the federal
4 PM2.5 standard.
5 Recently, the South Coast Air District proposed a
6 concept that would provide a way to claim additional NOx
7 reductions towards their demonstration for attainment of
8 the federal PM2.5 standard. The district proposes
9 requiring older larger fleets that operate vehicles in the
10 district to either meet NOx targets stricter than those in
11 the proposed statewide rule or to apply for incentive
12 funding.
13 In support of this, the District has committed
14 $120 million of their Carl Moyer fund allocation to
15 off-road projects over the years 2008 through 2011.
16 Fleets that receive incentive funds would then be required
17 to use them to achieve additional NOx reductions, most
18 likely through engine repowers.
19 Under this proposal, fleets would be required to
20 keep vehicles that are controlled through the program
21 within the district for 75 percent of their operating
22 hours over the contract life of the incentive funding.
23 --o0o--
24 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
25 WHITE: In conjunction with the South Coast and CIAQC, and
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1 based on the South Coast concept, staff has developed
2 draft regulatory language that could create such a
3 program. This program is called the South Coast/San
4 Joaquin Valley Off-Road Opt-In for NOx, or SOON Program.
5 Staff's draft proposed regulatory language would open up
6 the program only to the San Joaquin Valley and South Coast
7 Air Districts and would require these districts' governing
8 boards to formally opt into the program before it would
9 take effect.
10 The SOON Program would require affected fleets to
11 apply annually for incentive funding, but would only
12 require additional action of fleets if they are funded.
13 Affected fleets are defined as large fleets with 20,000
14 horsepower in the statewide fleet and having more than 40
15 percent Tier 0 or Tier 1 vehicles.
16 Because this program is predicated on the use of
17 incentive money, any reductions funded through SOON must
18 conform to state law and need to be surplus to those
19 achieved through compliance with the proposed statewide
20 in-use off-road diesel vehicle regulation.
21 A copy of the draft regulatory language is
22 contained as Attachment 1 to the Summary of Key Issues
23 document that is available outside the hearing room.
24 --o0o--
25 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
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1 WHITE: The emission reductions provided by the SOON
2 Program will provide additional emissions reductions not
3 already accounted for in the South Coast's PM2.5
4 attainment demonstration. Staff estimated these emission
5 reductions can range from 5 to 12 tons per day in 2014
6 depending on the amount of funding ultimately made
7 available, the cost effectiveness of the projects funded,
8 and the interaction with the statewide in-use off-road
9 diesel regulation.
10 --o0o--
11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
12 WHITE: I would now like to summarize some minor changes
13 to the regulation that staff is proposing. A copy of the
14 proposed changes has been provided in the Board packets
15 and is available to the public on the tables outside the
16 hearing room.
17 --o0o--
18 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
19 WHITE: As CIAQC requested at the May hearing, staff is
20 proposing to raise the threshold for small fleets to 2500
21 horsepower. This will define approximately an additional
22 7 percent of fleets as small, giving them more time to
23 comply with the regulation's PM provisions and exempting
24 them from the NOx requirement.
25 Staff estimates that this change will reduce the
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1 NOx emission benefit by about 1 to 3 percent and have no
2 impact on the proposed regulation's PM benefits. Staff is
3 also proposing refinements to the safety exemption
4 language to make them more clear and to provide for an
5 appeals process.
6 Staff heard from several fleets that were
7 concerned that the three-month grace period we had
8 proposed for out-of-state fleets to meet the fleet average
9 targets could give out-of-state fleets an unfair
10 advantage, especially for short duration projects. So we
11 have proposed to remove that grace period.
12 We are also proposing to define operator training
13 facilities operated by the unions as small fleets such
14 that they may have additional time to take advantage of
15 the Carl Moyer Program.
16 We also have proposed some minor other clarifying
17 changes. While staff has not included the SOON Program as
18 part of the proposed changes, staff may consider including
19 that regulatory language as part of these modifications
20 and subject to a subsequent 15-day public comment period.
21 I would now like to conclude with staff's
22 recommendation.
23 --o0o--
24 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
25 WHITE: Staff recommends the Board adopt the proposed
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1 regulation with the proposed minor changes just discussed.
2 This concludes my presentation.
3 CHAIRPERSON NICHOLS: Thank you.
4 Before I go to Board member questions, we need to
5 hear from our Ombudsman about the public participation
6 process and any concerns she may have.
7 OMBUDSMAN QUETIN: Chairman Nichols and members
8 of the Board, since this regulation was heard in May,
9 staff has given eleven additional presentations to various
10 stakeholders in the construction and defense industries,
11 as well as to several counties and air quality coalitions.
12 They have obviously also met with many individual
13 companies impacted by this proposal.
14 As you heard, on June 18th and July 16th, staff
15 held public workshop meetings in Sacramento.
16 Approximately 80 to 100 people attended each meeting,
17 which were also webcast.
18 In April, staff established a toll-free phone
19 number to allow stakeholders to call in and get
20 information on the proposed regulation. So far, they have
21 received over 60 phone calls with the majority of the
22 calls occurring since the week of July 16.
23 The notice for extended deliberations for the
24 regulation were posted on June 7th, 2007. In July 2007,
25 staff sent a mailing to 312,000 licensed contractors in
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1 the state notifying them that the proposed regulation was
2 postponed until July 26th, 2007.
3 The revised staff report was available at 6:00
4 p.m. last night. There are many outstanding issues which
5 will be presented by individual speakers. I'll let them
6 speak for themselves. Thank you.
7 CHAIRPERSON NICHOLS: Thank you very much.
8 I'll now go to the Board before we begin calling
9 our witnesses. And I'll just start at the far end here to
10 my right.
11 BOARD MEMBER BERG: Thank you, Madam Chairman.
12 I think I'd like to start on the actual
13 presentation. But first of all, I would like to put into
14 the public record my thanks to both Erik and Tony and all
15 the work that you have done. And I appreciate the way
16 that you have engaged me in the process and the dedication
17 with which you have really looked at these issues.
18 And I understand we still have a lot of very
19 pertinent issues on the table that we weren't able to come
20 to consensus. But that does not change the fact that
21 tremendous time and effort on your department's part and
22 your leadership has been exemplary. And I'd like to put
23 that into the record.
24 Okay. I'd like to understand on when you talked
25 about the exemption, I get a couple of things out of the
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1 way. I would like to understand that Job Corps under the
2 nonprofit is going to be exempt so I can just cross that
3 off my list.
4 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
5 WHITE: That is correct.
6 BOARD MEMBER BERG: Thank you.
7 Also, could you just review the safety appeal
8 process very quickly and specifically the timing? If
9 somebody has a safety issue on a particular piece of
10 equipment, how will that affect the timing of their
11 compliance?
12 SENIOR STAFF COUNSEL TERRIS: Basically, if a
13 party is unhappy with the initial determination by the
14 Executive Officer regarding safety, they would have the
15 right to file an appeal immediately. And during the
16 appeals process, they would basically be -- they can stay
17 compliant until the reconsideration takes place. And that
18 would -- basically, reconsideration would be directed to
19 an independent hearing officer who would basically
20 establish a record and hold a hearing or could do a
21 basically hearing from written submissions and make a
22 determination. That determination would be then forwarded
23 to the Executive Officer, who would then make -- could
24 accept or reject that determination.
25 BOARD MEMBER BERG: And is that going to also be
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1 true with -- one of the safety nets that I feel is present
2 in the regulation is the fact that you do not have to put
3 retrofit or repowers in equipment that there is none
4 available. Yet, from a sales and marketing perspective,
5 there could be some overeager individuals that say mine
6 can fit into anything.
7 So how are we going to reconcile so that
8 equipment owners are not spending a significant amount of
9 time trying to figure out what the heck to do?
10 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
11 WHITE: One of the additional changes we've made is to
12 reference OSHA requirements that may be in place. I don't
13 believe at the present there is much that addresses this.
14 However, in conversations with some of the stakeholders,
15 we've committed to work with OSHA on the development of
16 appropriate guidelines for retrofit safety moving into the
17 future. So there will always be an ability then when we
18 get those in place for fleets to have some standard to
19 point to that would indicate whether or not a retrofit
20 would be safe on its face.
21 So I think we've tried to move towards that
22 direction and have a more definitive benchmark if you will
23 for this and certainly if we've fallen a little short of
24 the mark with the proposed changes we've made, we'll
25 continue to work with stakeholders on clarifying that
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1 through this process.
2 BOARD MEMBER BERG: Thank you.
3 And also on the verification process, when a
4 particular piece of equipment is verified, it's verified
5 for a specific horsepower and piece of equipment so that
6 the consumer is able to make wise choices without having
7 to become an engineer themselves?
8 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
9 WHITE: That is correct. The decision tree for whether or
10 not a retrofit will work is really a two-step process.
11 One is, is the device verified for a particular engine?
12 So on our web page, there is a listing for each device and
13 the engines for which it is verified.
14 And the second piece is to work with installers
15 on whether or not that is the right device for that
16 application, whether it will fit, whether the duty cycle
17 is appropriate, et cetera.
18 So I think there's very clear steps through the
19 process as a fleet owner or vehicle owner would try to
20 decide whether or not or what was the most appropriate
21 device to install on their vehicle.
22 BOARD MEMBER BERG: And we acknowledge out of the
23 180,000 pieces of equipment that are going to fall under
24 this rule that we need significantly more retrofit and
25 repowers verified in order to meet the need of this
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1 regulation.
2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
3 WHITE: Yes. And that is certainly -- from the ARB's
4 perspective as we've looked at the opportunities and the
5 showcase program to do just that. And I can tell you that
6 as we went into that program, the response has exceeded
7 our expectations in terms of the variety and the number of
8 devices that were submitted for inclusion in that program.
9 I think it was a phenomenal response on behalf of
10 the retrofit manufacturers. And so I'm very optimistic
11 that out of that program we will emerge into a marketplace
12 that has much more variety for the fleet operators in the
13 very near future compared to what we have today.
14 BOARD MEMBER BERG: And in that showcase, will we
15 be demonstrating all tiered engines, so there will be a
16 demonstration of Tier 0 engines through Tier 2?
17 And the reason I'm asking that is it appears to
18 me that the older engines are much more challenged. And
19 to have all Tier 2 or Tier 3 in the showcase to me would
20 be demonstrating the easier options. And I think that the
21 older options are the ones that are going to give us the
22 larger challenges.
23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
24 WHITE: Yes. The showcase is designed to spur
25 verification over all engine tier levels over a variety of
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1 engine and horsepower ranges and a variety of different
2 equipment types.
3 With the equipment type profile that we're really
4 looking for in that program, trying to mirror what is in
5 the statewide fleet so that we're not focusing all on
6 scrapers or all on graders, but we'll be hopefully being
7 able to develop -- the retrofits will be verified that
8 will work across a broad variety of equipment types,
9 across a broad variety of horsepower ranges and be able to
10 address both older technology, the Tier 0 technology, as
11 well as the newer Tier 2 or Tier 3 technology.
12 BOARD MEMBER BERG: We didn't mention that a
13 technology and some reporting back to the Board. And I
14 don't know, Madam Chairman, if this is an appropriate
15 time, but I certainly would like to put on the table that
16 we would have a technology and cost review in January
17 2009, which would be three months before the March 2009
18 implementation date where staff would come back and give
19 us an update on the technology that has been verified
20 along with the current cost. And allow us -- oh, and
21 maybe we can also get a review of the showcase.
22 And it would be an opportunity not only to
23 provide another safety net, but really to have a strong
24 feeling that those areas where we're going to take a leap
25 of faith today that we would be able to check in. So I
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1 would just like to put that on the table
2 CHAIRPERSON NICHOLS: I see quite a few heads
3 nodding. But what I'm going to do is keep a list of
4 suggestions like that, and we'll come back to them at the
5 end.
6 BOARD MEMBER BERG: That would be wonderful.
7 Thank you.
8 And resources are another big item on my list,
9 resources specifically for staff in the way of education
10 and outreach, as well as the verification program, and
11 then compliance and enforcement.
12 Could you speak a little bit to the fact of the
13 resources that are going to be needed and how we can
14 assist to make sure that that becomes a reality?
15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
16 WHITE: Sure. We certainly recognize as we've gone
17 through this process the need for additional resources to
18 support the implementation and enforcement of a regulation
19 of this scope and have identified a need for at least an
20 additional 25 staff to support in those efforts.
21 With those staff being broken up into staff that
22 would assist the fleets in education, in outreach, in
23 complying with the regulation, understanding its
24 provisions, and also on the other side of the house have
25 new staff dedicated to the enforcement of this regulation
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1 as well.
2 And on the enforcement side, we see a lot of
3 synergies with some of the existing programs that we
4 already have in place, including our smoke inspection
5 program, our roadside inspection program where we have
6 inspectors out in the field looking at heavy-duty trucks
7 going down the road, doing stops at weigh stations, truck
8 stops, other facilities.
9 And since most of this equipment does get
10 trailered around the state, there will certainly be ample
11 opportunities for those existing staff to see these
12 vehicles as they're being transported, have access to the
13 information that the fleets are reporting at their
14 disposal in the field, and be able to check those vehicles
15 at the time we're looking at the on-road truck.
16 So we've begun conversations certainly internally
17 on how to coordinate enforcement and how to begin the
18 implementation effort, which we really see needing to
19 begin tomorrow. We recognize we cannot wait, you know,
20 several months down the road to begin undertaking these
21 activities. And we've made a commitment to the industry
22 to work with them through work groups, through very good
23 working relations to begin a process of letting all the
24 fleets know who haven't been part of this process of what
25 the requirements are, holding forums throughout the state
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1 so we can educate the fleets, trying to bring equipment
2 manufacturers and fleet operators together, since many of
3 these fleets may not have heard of any of these devices or
4 some of these companies, and doing everything we can to
5 try to make sure we're successful in the implementation of
6 this regulation.
7 BOARD MEMBER BERG: And I think I'll jump and ask
8 this question of Mr. Cackette. Do we have the proper
9 staffing and the proper funding in the verification
10 program? Are you comfortable that we are going to be able
11 to go verification on steroids to accomplish the goal over
12 the next 18 months?
13 ACTING EXECUTIVE OFFICER CACKETTE: We have the
14 bare bones structure and some flexibility to put new
15 people on from other projects. But to do this
16 effectively, we are going to have to obtain additional
17 staff. And that's a one-year process. So we're not going
18 to wait for one year from now until next July. But we
19 will get people on the road right away. But it will be
20 somewhat limited initially compared to what is optimum,
21 but enough to get going.
22 BOARD MEMBER BERG: I don't know what our
23 position as Board members is to help you. It seems to me
24 like we're up here stating the obvious. And I just don't
25 feel very comfortable that -- I don't want to feel that
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1 we're being cavalier up here recommending what you do,
2 when you already are very capable of knowing that. So
3 whatever it is that you need from myself, and I'm sure the
4 other Board members would echo this, please let us know.
5 Because we want to be supportive and we want to help you
6 fight the fight to get the job done.
7 Also on my list is a level playing field. As
8 outlined in the Board presentation, some of this cost is
9 going to have to be passed on. And maybe that
10 conversation will come up through testimony and I can
11 address it through testimony. But keeping that playing
12 field level and for those individuals that are reviewing
13 these bids, reviewing these projects to keep in mind that
14 they should be asking if they have compliant equipment
15 coming to their job site is critical, because the people
16 that are complying are going to have these costs in their
17 bids. And people that may not know or for whatever reason
18 are not complying may not. And that is going to be
19 problematic. And I don't know how to address that. But
20 it is a concern for me.
21 The last disconnect I have, and maybe we'll also
22 deal with this through public testimony, I'm a little
23 confused on CIAQC's recommendation for a triennial
24 compliance period and the concern for them to deliver the
25 reductions and their willingness to join South Coast Air
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1 Quality and the San Joaquin Valley to give even additional
2 reductions. That seems to be a disconnect to me. Because
3 if you can't give originally what we are asking for, then
4 how can we give more? Similarly, if they're saying that
5 they're willing to give more, it would seem to me that
6 they're figuring out how to give us the first part if
7 they're going to give more. And I'd like to hear more
8 about that and maybe that will come out also through
9 testimony.
10 CHAIRPERSON NICHOLS: I would like to suggest
11 that we address those questions directly of the people who
12 made the proposals, rather than using staff as
13 interpreters, if you don't mind.
14 BOARD MEMBER BERG: No. I think that's a great
15 suggestion.
16 And finally, when we're weighing correct and very
17 effective implementation against job loss, which we see on
18 slide 23, against the overall health benefits but maybe
19 also a difference in effectiveness versus the 12 percent,
20 that's a very, very fine balancing act. And I'll be
21 looking forward to also some additional testimony so I can
22 figure out how we are walking that line.
23 And so with that, thank you very much for your
24 patience for my questions.
25 CHAIRPERSON NICHOLS: Thank you.
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1 SUPERVISOR HILL: Thank you, Madam Chair.
2 Just a couple of comments. Thank you, Erik, for
3 thoroughly analyzing and articulating the analysis of the
4 questions I raised. I appreciate that. It was very
5 thorough and it was great.
6 And I also appreciate the recognition of and
7 sensitivity to the Job Corps and the recommendation. I
8 think that's a tremendous suggestion and well warranted.
9 Also, I wanted to thank the -- make sure for the
10 record that the fleets that you analyzed and especially
11 Downs Equipment Company for their willingness to allow you
12 to get in there and sit under the microscope and take all
13 aspects of their business and their tax returns and their
14 profits. I think that goes well above and beyond what
15 many would do and what most people would expect them to
16 do. So thank you.
17 The question in one of the slides and actually
18 slide 11 you talked about the cost in the first few years
19 can be significant. And then you address some of the
20 total costs in the fleet analysis later on. As a
21 percentage of total cost, how would you determine the
22 initial costs and the significance of that in the early
23 years?
24 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
25 I think ultimately the answer depends on the individual
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1 company and what they have done already. The costs
2 obviously in the initial years would be the ones that are
3 required to do the maximum turnover that would have the
4 high capital cost depending on the age of equipment they
5 buy to comply. If they're buying newer equipment, there's
6 higher capital investment than if they buy used.
7 The other aspect is do they take advantage of the
8 early credit or not. Most fleets would have to do the 20
9 percent retrofits in 2010 if they do not take any early
10 actions. If they were to take advantage of the early
11 actions and for example retrofit ten percent of the
12 horsepower in 2008, they would be required to do none in
13 2010. Also the strategy they use on whether they are
14 controlling their cleanest engines, some fleets found that
15 was the better strategy because they keep them the longest
16 and others found they're better off retrofitting dirtier
17 engines because they'll need the averages sooner. So
18 ultimately that balance is going to be tailored to the
19 individual company's philosophy.
20 But the retrofit costs are front-loaded. The
21 emissions reductions on the PM side are a much greater
22 percentage of magnitude than the NOx provisions would
23 require reductions in NOx. And because of that, the
24 retrofits also have operating costs associated with them
25 and do not provide any business value to operate them on
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1 your machines. You do not get better revenue for having a
2 retrofit. You don't get better fuel economy. There's no
3 advantage on the business perspective to have those
4 retrofits. And that's where the cost burden I think is
5 the most obvious and the greatest concern for most fleets
6 is in that initial period and primarily because of the
7 retrofits.
8 SUPERVISOR HILL: Thank you.
9 There's no overall percentage of the $3
10 billion --
11 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
12 Maybe I can address that.
13 If you look for all the fleets in total in the
14 state, there's about $1.5 million in cost in the first
15 three years. And if you think the total cost of the reg
16 is 3 to 3.5 billion, that's 40 or 50 percent of the cost
17 occurring in those three years.
18 SUPERVISOR HILL: That was what I was looking
19 for.
20 The other question -- and Board Member Burg
21 raised it -- and that's the education question. I know
22 when you were analyzing some of the fleets and some of the
23 work that was done, especially with the Downs fleet and
24 the equipment rental analysis, the compliance alternatives
25 I think was the question. And that seems to be crucial in
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1 terms of how a fleet operator will implement the rule if
2 it's adopted. And there's a broad range of how that can
3 be done, from what it seems like. And we certainly would
4 want them and I'm sure they would want to do it in the
5 most cost effective manner.
6 How will we be outreaching to those operators to
7 make sure they take advantage of the best compliance
8 alternative available?
9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
10 WHITE: Well, I think there's a number of things that we
11 have done in the past for different rules that we
12 certainly intend to pull from as a building block for some
13 of this.
14 I use, for example, on the public fleets on-road
15 regulation, which this Board approved a few years ago and
16 is being implemented just this year, we held I want to say
17 it was eight or nine workshops throughout the state in
18 various parts of the state, both urban and rural. And as
19 part of those, we brought retrofit manufacturers together
20 to these work group meetings along with the fleets to
21 discuss what actions would be necessary under that
22 regulation to come into compliance. And then there were
23 half a dozen to a dozen retrofit manufacturers there that
24 the fleets could get information on the variety of
25 products that were out there. So certainly we would want
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1 to build on that type of a program as we look moving
2 forward.
3 Another example that's been suggested by industry
4 is a working group that they've had for the portable
5 equipment and the successes they've had in that in terms
6 of working through implementation issues, helping get the
7 outreach there, helping look over materials I think that
8 ARB produces to try to educate, you know, fleets on what
9 the requirements are.
10 We also know that there's several companies and
11 individuals out there that would very much like to have an
12 opportunity to play a role in assisting fleets in
13 complying. And I would certainly see ourselves working
14 closely with them so that whether they go to individual A
15 or B or C and how do I come into compliance with this,
16 they're getting the same message. And the data is being
17 developed and complied in the same way. And we don't have
18 any issues in terms of compliance on our end.
19 And it's going to require ARB being very
20 proactive. And that's where as Ms. Berg pointed out the
21 need for additional resources is going to be so key where
22 we really see those on the implementation side of the
23 house being utilized to do activities like that.
24 SUPERVISOR HILL: Thank you.
25 Thank you, Madam Chair.
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1 CHAIRPERSON NICHOLS: Before we go on, I'm
2 holding in my hand a cell phone which has been turned off.
3 I have been advised that really annoying sound that we're
4 getting is when somebody is receiving an incoming call,
5 even if your cell phone is tuned to silent. It still
6 interferes with the sound system in this room.
7 So I would like to ask everybody who has a cell
8 phone or similar equipment to step outside the room if you
9 need to make or receive a call. That will make the whole
10 proceeding better for everybody. Thank you.
11 BOARD MEMBER CASE: Madam Chair, thank you for
12 the opportunity to comment.
13 And I really appreciated the staff's presentation
14 this morning. A lot of work has gone into this rule. And
15 as the newest member, I've spent a lot of time going over
16 the transcripts of that meeting in May to understand what
17 the issues are.
18 I do have a question. On slide number ten, there
19 appears there have been two models, one at which the ARB
20 staff has worked with and one which industry has had a
21 consultant working with that. And slide ten refers to
22 apparently a modeling difference in the fleet turnover
23 rate, that the normal turnover rate was too low in the
24 model. Can you expand on what you found there? Because
25 there were significant differences in estimated costs
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1 between 3 1/2 billion and 13 billion. Please, go ahead.
2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
3 WHITE: Early on in the development of this regulation,
4 one of the key foundation pieces that staff always does is
5 try to get a good handle on what are the emissions from
6 these sources? How many vehicles are there? How are they
7 used? How many hours are they operated?
8 And we looked at a wide variety of data, national
9 data, California specific data to characterize the
10 California fleet. And based on the compilation of that,
11 we came up with an average turnover rate in the state of
12 California that was about 5 percent.
13 When the industry analysis was done, the turnover
14 rate I believe was assumed to be 3 percent, which is --
15 while it may seem close to ours, if we're talking about a
16 lot of vehicles with a lot of emissions, that becomes very
17 significant. And the justification for using that lower
18 turnover number was that that was what the U.S. EPA uses
19 in their model for off-road equipment nationwide.
20 So we went back and we spoke with the U.S. EPA.
21 We looked at their model. And in fact, we're not able to
22 come up with a number that was 3 percent. And oddly
23 enough, came up with a number that was higher than ours
24 suggesting the turnover occurred even faster than what we
25 had assumed. We felt our number was a very good
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1 representation, certainly the best representation that's
2 out there of how the California gets turned over with
3 time. That 2 percent difference translates to a very
4 substantial difference in cost if you are looking at what
5 fleets are doing on their own and what fleets are going to
6 have to do above and beyond what they're doing to comply
7 with the regulation.
8 BOARD MEMBER CASE: Thank you.
9 One of the other areas I'm interested in focusing
10 a bit more on is incentive funding. We heard and I've
11 received correspondence, I believe everybody probably has,
12 between South Coast Air Quality and the San Joaquin Valley
13 Pollution District to look at doing an opt-in program that
14 would actually provide more stringent rules but with
15 incentive funding attached to it. And I also understand
16 the Bay Area is now part of that effort, that I'm sure
17 we'll hear testimony about.
18 Can you talk a little bit about the opportunities
19 for business and incentive funds to help offset some of
20 the costs related to getting their fleets cleaner?
21 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
22 WHITE: Certainly. The opt-in element is certainly
23 completely predicated on the use of incentive money. So
24 participation on that for fleets that are pulled into that
25 program, if the Board does in fact move to bring that into
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1 the proposed regulation, would make that money available
2 to those fleets.
3 But as we've gone through this process, we've
4 certainly recognized that especially for the medium and
5 small fleets, we need to make some considerations for
6 them. The economic impacts are as challenging as the
7 large fleets, but the resources may not be as adequate or
8 readily available to them as some of the larger fleets.
9 So we've structured some of this piece of the
10 regulation to provide additional time for fleets to
11 utilize existing incentive moneys. And in particular, the
12 Carl Moyer Program, to take actions before they have to
13 under the regulation and have those actions be surplus and
14 then visive be able to be funded through the Moyer
15 Program.
16 When we looked at the medium fleets, for
17 instance, we moved the compliance date back from 2010 to
18 2013. That was intended to give three more years of Moyer
19 eligibility to those fleets. As we looked at the small
20 fleets, we move that compliance date to 2015. And under
21 the Carl Moyer Program, exhaust retrofits can be fully
22 funded by the local air districts through that program.
23 So there's an opportunity for small fleets if they meet
24 the criteria for the program to have their retrofits fully
25 paid for through the use of incentive moneys.
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1 So we tried very hard to try to find that balance
2 of we want to get the emission reductions as soon as we
3 can, but we recognize there's economic challenges. And
4 are there some things we can do within the existing
5 programs that are in place to facilitate that compliance
6 and try to ease the burden as these fleets are coming into
7 the program, especially the mediums and smalls, so they'll
8 be better prepared when the initial compliance dates come
9 about.
10 BOARD MEMBER CASE: In your opinion, do we have
11 adequate Carl Moyer funding? How does that all fold in?
12 I believe it's something that has to be in the state
13 budget on an annual basis where are we today and what do
14 we need to try to get to that next step? Because I know
15 funding has been continually an issue.
16 ACTING EXECUTIVE OFFICER CACKETTE: We have Carl
17 Moyer funding from various pots that adds up to $140
18 million a year. And the funding source that provides
19 those moneys is through 2014. So there is money
20 available.
21 We've discussed this with the South Coast quite
22 extensively, and their agreement to put $30 million a year
23 towards this add on or the SOON Program should you decide
24 to go forward with that does not empty the bank. They've
25 indicated they have money left over that could to go to a
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1 number of sources. But certainly funding the small and
2 medium people who are not affected by the add on program
3 but affected by the Base Program, there should be some
4 money available for that. We have not thoroughly explored
5 that yet with the San Joaquin Valley. We've had some
6 discussions about money that could be made available out
7 of their Moyer funds.
8 BOARD MEMBER CASE: And then just one last
9 question on financing. Mr. Downs got up and spoke to the
10 fact that his after-tax profits is what's paying for the
11 financing on new equipment. I believe there would also be
12 a depreciation expense prior to that. But did we look at
13 that commitment that's already been made in terms of
14 impacts on companies that have commitments to pay for the
15 cost of purchasing that are spread over a number of years?
16 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
17 No. When we did the analysis -- my name is Tony Brasil,
18 the Manager of the In-Use Control Manager Section.
19 When we looked at the impact to individual
20 fleets, we looked at them not growing their fleet size and
21 looking at the impact of the regulation on their fleet if
22 it stayed at the same size. If the fleet does grow by
23 adding newer vehicles to its fleet, then its averages will
24 get getter and the overall impacts to their cost as a
25 percentage of the revenue would actually be smaller than
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1 our estimates.
2 So we looked at the static fleet size to, one, be
3 more conservative and, two, that again for each company
4 their growth rates and how they make changes in the future
5 is very uncertain. So we did not -- and we are, of
6 course, projecting for the next ten years what they might
7 be doing. And so to some degree, the impact on their cash
8 flow would reduce their ability to grow their company to
9 the extent that the financial impact would be on their
10 cash flow ability to borrow, but would get the emission
11 reductions by removing the dirtier vehicles from the fleet
12 and being replaced by cleaner ones.
13 BOARD MEMBER CASE: Thank you.
14 CHAIRPERSON NICHOLS: Thank you.
15 Ms. D'Adamo.
16 BOARD MEMBER D'ADAMO: I'm going to move quickly,
17 because I see we have a number of witnesses here and I
18 want to give them the opportunity.
19 Also want to echo what the other Board members
20 said, to thank staff, Mr. Downs, the other companies that
21 shared information with staff. And really do appreciate
22 the economic analysis in closing the gap. Because at the
23 last hearing, just the huge difference between 3 billion
24 and 13, I just didn't see how we could move forward. So I
25 feel much more confident in the figures that were
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1 presented today.
2 A couple of questions starting off with Job
3 Corps. I thought the idea was not necessarily to exempt
4 Job Corps, because I'm concerned about worker exposure.
5 And I understood that perhaps instead there would be
6 opportunities for them either through federal funding or
7 donations from some of the turnover equipment. I would
8 just like staff to comment on that.
9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
10 WHITE: Certainly. Initially, we thought it seemed most
11 appropriate -- Job Corps is already a small fleet. And
12 when we looked over -- initially, when we looked over the
13 information that they provided in terms of what types of
14 vehicles that they had, it seemed appropriate to keep them
15 in that classification. And then as we looked at other
16 activity data for them in terms of how much fuel do they
17 use, how are their vehicles operated, we realized that
18 there's very few hours there that are operated in. And it
19 was going to be very unlikely that they would meet the
20 minimum Moyer criteria for cost effective to be able to
21 get retrofits through that program, which is really a big
22 part of the intent for the small fleets and the timing for
23 the small fleets.
24 And so because it was a limited number of
25 vehicles. And the operation was so limited and it seemed,
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1 you know, such a good program to be supportive of and not
2 impact with this regulation, we felt that it would be
3 appropriate, we can either work with them to try to get
4 those -- because I think staff shares the concern that not
5 only are the health benefits, you know, important to
6 realize, it's a good opportunity for the people who go
7 through that program to get an exposure to this
8 technology, vehicles that have this technology, for when
9 they move into the work force. But that the obligation
10 might be more than this particular program could bear.
11 And that we got swayed in that way, that it made some
12 sense to have them report, be in the program, but not have
13 to do the retrofits beginning in 2015.
14 BOARD MEMBER D'ADAMO: Okay. And then you'll
15 continue to work with them --
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: Yes.
18 BOARD MEMBER D'ADAMO: -- on any other options
19 that become available.
20 As far as enforcement, just want to clarify,
21 because I am concerned about the unfair advantage that --
22 for those companies that don't comply. We are requiring a
23 certificate of compliance?
24 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
25 WHITE: Yes. We went back and looked at what
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1 opportunities we had within existing regulation to include
2 that in and if there was opportunities for obligations on
3 behalfs of people who, you know, contract for this
4 equipment to require that, and it didn't appear that that
5 would be within the scope of what we could do.
6 But what we thought was important would be, since
7 we had all the information and we knew how fleets were
8 reporting, who was reporting, and what they were
9 reporting, that we would take on the obligation to issue a
10 certificate of report compliance. So we will issue
11 something to the fleets annually that says you have met --
12 you have stated and claim that you have met the
13 requirements of the regulation, and we certainly will be
14 going out and doing checking and our other enforcement
15 activities, so it's not a leap of faith in that regard.
16 But then that would provide a tool for those who
17 do the business, whether it's, you know, local governments
18 contracting for work. But it would add something that the
19 people who hire for this work could add onto the bid
20 requirements that they have.
21 And so we're hopeful that this will catch on,
22 perhaps through the CEQA process and other things, that
23 lead agencies will look for this piece of paper as they
24 would for, you know, certificates of compliance for
25 workers' comp., certificates of compliance for insurance,
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1 and other types of obligations that the fleets have to
2 have. So -- and then we will continue to evaluate whether
3 that is sufficient or I think we can look in the future if
4 we need to, you know, address that further.
5 BOARD MEMBER D'ADAMO: Terrific. And then the
6 last question on retrofits. Mr. White, you and I met with
7 an industry representative yesterday who expressed concern
8 about particulates and felt that there might be
9 additional -- if additional incentive were there for those
10 companies that choose to retrofit early on. Just
11 wondering if there's anything we can do to further
12 incentivize that because of the potential health benefits.
13 I -- recognizing that there may not be very many companies
14 that would want to exercise that option.
15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
16 WHITE: Yeah. We went back and looked to see what -- how
17 the regulation would handle fleets that, for whatever
18 reason, felt that exceeding the 20 percent retrofit
19 requirements or going beyond the PM fleet average targets
20 made sense, how that wouldn't help them in the back years,
21 if you will.
22 And what we looked at -- we looked at the
23 interaction of if a filter is put on a dirty vehicle,
24 let's say, in the early years of the program, and then
25 that fleet would be compelled to turn that over later,
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1 were they going to -- because of their good deed early on,
2 they were going to be penalized later on in the program.
3 And we looked at whether or not that potential could
4 occur. It dawned on us that while we're very aggressive
5 on our PM retrofit rates at 20 percent per year, the
6 turnover rates never exceed 10. So we would never have a
7 situation where a fleet would exceed that 20 percent and
8 then have to turn over that whole block of vehicles at the
9 same time in a subsequent year. That because the turnover
10 is capped at 10 percent, they would still have several
11 years where those retrofits were on. They wouldn't have
12 -- they wouldn't be compelled under the regulation to turn
13 it over.
14 So as we went back to look to see if that type of
15 scenario were to occur, it doesn't appear as though the
16 regulation would allow that type of scenario to occur.
17 BOARD MEMBER D'ADAMO: Because they've got that
18 10 percent that would keep being --
19 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
20 WHITE: Correct. Yes.
21 BOARD MEMBER D'ADAMO: -- being moved out.
22 Okay.
23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
24 WHITE: Yes.
25 BOARD MEMBER D'ADAMO: Thank you.
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1 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
2 WHITE: That cap will protect them in the future years.
3 BOARD MEMBER D'ADAMO: All right. Thank you.
4 CHAIRPERSON NICHOLS: Thank you. I'm going to
5 defer my comments and questions until later. But before I
6 move on down the dais here, I would like to talk for just
7 a minute about process, because I know there have been
8 people looking a little bit restless out there in the
9 audience. And I don't blame you, because it's a long time
10 that the Board and the staff get to talk before we get to
11 hear from you.
12 So let me just explain the intention here, which
13 is, as soon as we finish with Board member comments and
14 questions so we've sort of set the stage here, we will go
15 directly to the list of witnesses. I have a list which I
16 now see totals 57 people. And it's quite a good mix of
17 people who are planning to testify in favor or oppose or
18 neutral. And we look forward to hearing from all of you.
19 We will be giving three minutes, as I think I
20 said at the beginning, to everybody who speaks. We'll
21 take a break at 11:30 for the court reporter and for
22 ourselves, for ten minutes. And then come back until
23 12:30, and we will take a one-hour lunch break. So you
24 can plan on the fact that you will get lunch. And if my
25 estimates of all of this are correct, we should be able to
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1 finish all of our testimony by around 3:00 o'clock or 3:30
2 or so. And then proceed to final discussion and a
3 decision on the part of the Board.
4 So that at least gives you some sense what's
5 facing you for the remainder of the day.
6 Board members may from time to time get up to go
7 into the back room if they need to, but they are actually
8 able to hear witnesses at all points during the
9 proceeding. Just so you know, if a particular Board
10 member isn't here when you speak, they will have heard you
11 anyway because there's no escaping from the sound system
12 here.
13 All right. With that, I will now turn to my left
14 and proceed on here with Ms. Riordan.
15 BOARD MEMBER RIORDAN: Thank you. Madam Chair,
16 I'm going to do as you did. I'll defer until some of the
17 presentations because they're going to cause me, then, to
18 go back to staff and get some clarification. So I'd like
19 to defer right now.
20 CHAIRPERSON NICHOLS: Okay. Thank you.
21 Sterling?
22 SUPERVISOR HILL: Ditto here.
23 CHAIRPERSON NICHOLS: Mr. Loveridge.
24 BOARD MEMBER LOVERIDGE: Just two very quick
25 questions. One, we can adopt soon today, is that
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1 something that this Board can do if we choose?
2 ACTING EXECUTIVE OFFICER CACKETTE: Yes, it can.
3 BOARD MEMBER LOVERIDGE: Second, just a quick
4 comment on what I understand, some legislation appeared to
5 require green requirements for construction projects that
6 are funded by state bonds. Does that relate or have
7 anything to do with what we're doing today?
8 ACTING EXECUTIVE OFFICER CACKETTE: I'm actually
9 not sure of what the status of that in the overall budget
10 negotiations are. If Rob happens to be here, he could
11 come up, if he is.
12 CHAIRPERSON NICHOLS: I think not. I don't see
13 him.
14 ACTING EXECUTIVE OFFICER CACKETTE: It doesn't
15 look like that.
16 BOARD MEMBER LOVERIDGE: Maybe you can ask him
17 to --
18 ACTING EXECUTIVE OFFICER CACKETTE: Yes. But in
19 general, the concept, I believe, would be that there would
20 be some minimum requirements on individual projects, that
21 at least older equipment use filters. And so it would not
22 conflict with the rule, but it could resolve in a compound
23 requirement that is more stringent for a given fleet for
24 that rule, because they might have to put on -- depending
25 on how much of their equipment's going on one project, you
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1 could see how they might have to put on more filters than
2 our implementation schedule would cause. But since our
3 schedule for putting the filters on is relatively
4 aggressive, I would think that any conflict would be only
5 in the first few years.
6 CHAIRPERSON NICHOLS: Okay. Any additional Board
7 member comments or questions at this time?
8 Yes.
9 BOARD MEMBER ROBERTS: I have just a single
10 question regarding the SOON Program, which sounds like
11 it's aimed at two districts. And I'm wondering if
12 consideration had been given, since it's a voluntary
13 thing, to having other districts opt into that.
14 ACTING EXECUTIVE OFFICER CACKETTE: Yeah. We did
15 -- we looked at those two districts mainly because it came
16 out of discussions and negotiations between the
17 Construction Industry Association and those districts,
18 that's where they were focusing on could they do more.
19 BOARD MEMBER ROBERTS: No, I understand that.
20 ACTING EXECUTIVE OFFICER CACKETTE: Yeah. That's
21 why it was limited to that.
22 BOARD MEMBER ROBERTS: Okay.
23 ACTING EXECUTIVE OFFICER CACKETTE: Right now,
24 the rule would limit as -- not the rule, but as our
25 suggested amendments of what has been discussed with those
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1 two districts, would limit it to those two districts. But
2 there's nothing --
3 BOARD MEMBER ROBERTS: Is there any reason why
4 that can't be made available to any districts that wanted
5 to, when they chose to opt in?
6 ACTING EXECUTIVE OFFICER CACKETTE: I think that
7 would be strictly up to the Board, and I'm sure that's
8 within the scope of the notice.
9 BOARD MEMBER ROBERTS: Okay. So that would be
10 possible for us to modify anything that we do here --
11 ACTING EXECUTIVE OFFICER CACKETTE: Yes.
12 BOARD MEMBER ROBERTS: -- today, should we decide
13 to opt -- to include that. Okay. Thank you.
14 CHAIRPERSON NICHOLS: Thank you. We will now
15 proceed, then, to call the witnesses in the order that
16 they are on my sign-up sheet. I'm going to call you three
17 at a time just so you know that you're on tap.
18 So we're going to start with David Yow, followed
19 by Shane Gara and David Porcher.
20 MR. YOW: Thank you very much. With the last
21 name of Yow, it's rare that I get to go first. So thank
22 you.
23 CHAIRPERSON NICHOLS: There you are.
24 MR. YOW: My name is David Yow, and I am here on
25 behalf of Assembly Member Joel Anderson who was unable to
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1 attend today. Thank you for holding this hearing.
2 There's going to be an awful lot of concerns
3 expressed here today and Assemblyman Anderson shares many
4 of them. I think the chief one, one that we're all
5 familiar with, is the cost. Three billion dollars is an
6 awful lot of money, especially for a relatively small
7 number of people in the state to be bearing. And then
8 passing that price along to the constituents that the
9 Assemblyman represents.
10 I think where we move forward from, from all this
11 today is in the direction of continued cooperation, and
12 the reality that this is an incremental process that we
13 have to do together. And it may require a number of
14 steps, but this regulation in particular is too large of a
15 jump forward and we're going to need to all get on the
16 same page before we can -- before we can support this.
17 Thank you very much.
18 CHAIRPERSON NICHOLS: Thank you.
19 I think in the interest both of time and of
20 everybody's eardrums, I'm going to ask you all to refrain
21 either from booing or from clapping. You can nod or shake
22 your head, or, you know, frown or smile, feel free to do
23 that. But let's, let's keep this moving forward without a
24 lot of demonstrations, please.
25 Okay, Mr. Gara, followed by Mr. Porcher.
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1 MR. GARA: Hello. I'm Shane Gara with Camarillo
2 Engineering, and we're a large fleet with 112 pieces of
3 equipment.
4 We are asking you to look at the complexity of
5 the off-road rule. We have a printout of the fleet
6 calculator to show everyone, from our -- from contractors
7 to our environmental partners, that setting up a strategy
8 is not an easy task. It takes weeks and months to do cost
9 analysis and then to add that strategy use to accomplish
10 your compliance goals. Once you understand how to enter
11 all your compiled information, this calculator comes to
12 life.
13 We have heard testimony from our environmental
14 partners questioning why we waited so long to come forward
15 to be heard. In our case, it is because until recently we
16 did not have the fleet calculator to show us the
17 complexities and many different and costly ways to comply.
18 We have made many projections with retrofits
19 only, retrofitting and repowering, retrofitting only
20 higher tier engines, to buying new tractors and repowering
21 and retrofitting in the same year.
22 With the help of MSRC Funding, Carl Moyer
23 Funding, and with the help of the South Coast Air Quality
24 Management District, along with Ventura County Air Quality
25 Management District, we have repowered 25 tractors in
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1 three and a half years at a cost of $3,127,978. Even
2 after spending that money, our cost to comply for one year
3 ranges from $1,045,000 to $2,676,000. We will all spend
4 millions of dollars a year over the next five years just
5 to re-spend that money when Tier 4 technology is
6 available.
7 We have used to Air Resources Board's tools, the
8 fleet calculator, to uncover an interesting fact. We have
9 found that if we retrofit all Tier 0 engines in our fleet
10 with PM filters first before repowers or retrofitting
11 higher tier engines, that we can cut PM emissions by
12 50 percent in the first two years of the regulation. It
13 is by far the most beneficial reduction in PM emissions
14 that we have found.
15 Thank you.
16 CHAIRPERSON NICHOLS: Thank you.
17 MR. PORCHER: My name is Dave Porcher with
18 Camarillo Engineering. One of our -- the fleets that was
19 presented is our fleet. We have the utmost respect for
20 the staff and all the time they have spent with us.
21 We have supplied data to show that the actual
22 cost of compliance is 33 percent to more than a hundred
23 percent higher than the staff estimates. We have shown
24 staff that by allowing us to keep our Tier 0 equipment in
25 our fleet until Tier 4 technology is available, then
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1 phasing this equipment out of our fleets, we would achieve
2 by retrofitting with level Three V-dex and retrofitting at
3 a rate of 10 percent a year, we would achieve a 50 percent
4 reduction in PM emissions in the first four years of
5 compliance. We have given staff guidelines to, also to
6 achieve this goal.
7 We feel strongly that the NOx devices needed for
8 these tractors will be available by the end of 2008 and
9 that would take care of the second part of the rule.
10 We ask you to consider a 10 percent instead of
11 the 20 percent a year on retrofits. The early years of
12 compliance are front loaded. If you make the first years
13 of compliance less financially burdensome, we could still
14 compete in the marketplace. That will give the Air
15 Resources Board time to work out the enforcement issues
16 that are going to be critical in creating a level playing
17 field.
18 If the rule stays as written, and we cannot pass
19 on the high cost of this rule, then we will borrow
20 ourselves into bankruptcy. In our efforts to pressure one
21 major equipment manufacturer into coming up with more cost
22 effective and Tier 3 repower solutions, we were given the
23 complex issues that they face. They are concerned that
24 they could lose up to a billion dollars in research and
25 development money that they will not be able to recover.
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1 The pressure that they are under to come up with Tier 4
2 technology has given them concerns that the money spent on
3 repowers will be lost because those engines will be
4 obsolete in a few short years. Along with that, we have
5 shown that our Tier 0 equipment has devalued by 75
6 percent. This represents our down payments, and on newer
7 equipment. It is --
8 CHAIRPERSON NICHOLS: Could you wrap up, please?
9 MR. PORCHER: Pardon me?
10 CHAIRPERSON NICHOLS: Sorry. Could you wrap up,
11 please?
12 MR. PORCHER: Okay. This has severely changed
13 our debt to asset ratio and bonding capability.
14 I'd just like to thank staff, the Board members
15 that have met with us, the Ombudsman, and especially to
16 Elizabeth Yura for allowing us to uncover this emissions
17 jewel.
18 Thank you.
19 CHAIRPERSON NICHOLS: Thank you.
20 Oh, there's a question. I'm sorry. Your time is
21 extended if somebody has a question.
22 BOARD MEMBER RIORDAN: I do have a question.
23 Mr. Porcher -- and I will disclose this. I have
24 met with Mr. Porcher. And one of the things, though, that
25 you didn't mention in your presentation today, that
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1 concerned me was, that you actually use your equipment in
2 three air quality basins. And when you go to access Carl
3 Moyer moneys, that has worked as a negative for you
4 because you can't necessarily always guarantee that that
5 money will stay in that district with that piece of
6 equipment that you've retrofitted.
7 I just want to note that for the staff. Because
8 I think your company is not unusual. You do have to
9 operate in different areas. You have to go where the jobs
10 are --
11 MR. PORCHER: That's correct.
12 BOARD MEMBER RIORDAN: -- and the projects are.
13 And so, therefore, I think that is one thing that we might
14 want to address in the future, and that is how do we help
15 a company access the Carl Moyer funding, and that works in
16 multiple air pollution control districts?
17 ACTING EXECUTIVE OFFICER CACKETTE: And if I
18 could just comment on that briefly. We do have -- we
19 withhold 10 percent of the Carl Moyer money or about
20 $14 million a year specifically for that purpose now. And
21 then companies can bid on what we call multi-district or
22 statewide basis for funds. And one of the reasons for
23 doing that was, in fact, for large construction equipment
24 that moves around. So there is an opportunity for them to
25 compete that is not -- does not have this geographical
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1 limitation to it.
2 BOARD MEMBER RIORDAN: Okay. Mr. Cackette, then,
3 would they apply through the Air Resources Board for that
4 money?
5 ACTING EXECUTIVE OFFICER CACKETTE: Yes.
6 BOARD MEMBER RIORDAN: Okay.
7 ACTING EXECUTIVE OFFICER CACKETTE: We have an
8 annual solicitation for that.
9 BOARD MEMBER RIORDAN: Then what we need to do
10 is, in our education program, make that abundantly clear
11 to those companies that would fall in the category of
12 Camarillo and working in multiple air pollution control
13 districts.
14 ACTING EXECUTIVE OFFICER CACKETTE: I should say,
15 though, on the specific application here for Camarillo as
16 a large company, they probably will not be able to qualify
17 for further Carl Moyer money if the Board adopts this
18 regulation because they come up -- it becomes to the point
19 where we are now paying for compliance and that's not
20 allowed under Carl Moyer.
21 But the availability of that money in general and
22 for medium size fleets that may move around was, was what
23 I was responding to.
24 BOARD MEMBER RIORDAN: Okay. If other moneys
25 were to become available later, that is a component we
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1 need to keep in mind. I recognize Carl Moyer may now be a
2 problem. But if we, you know, are aggressive and work
3 towards some other funding mechanism, then that just needs
4 to be kept in the back of our minds to, to address.
5 Thank you.
6 CHAIRPERSON NICHOLS: Thank you very much.
7 MR. PORCHER: Thank you.
8 BOARD MEMBER BERG: Madam Chair, I just have a
9 quick question on the Tier 0.
10 CHAIRPERSON NICHOLS: I'm sorry. Yes.
11 BOARD MEMBER BERG: Could staff respond on the
12 request on the Tier 0 with traps and filters and the fact
13 can we keep them in the fleet until 2014? Was that the
14 date, Mr. Porcher.
15 MR. PORCHER: Well, until Tier 4 technology is
16 available. Whether that be 2014 or '15. It would
17 severely -- help us if we can reduce these PM emissions
18 and the NOx devices are available, we should be able to
19 bring the NOx down. If --
20 BOARD MEMBER BERG: Okay. I --
21 MR. PORCHER: -- we are all gambling on the
22 technology --
23 BOARD MEMBER BERG: I understand -- I understand
24 that we're looking at Tier 0 retrofitted, can they stay in
25 the fleet until Tier 4 comes out?
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1 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
2 WHITE: Yes. There is a provision in the regulation that
3 provides a safe harbor, if you will, for a vehicle that
4 has been retrofit. It gets six years of useful life in
5 the regulation. In other words, it's never required to be
6 turned over once that retrofit is put on for six years.
7 So retrofits that happen in the 2010, 2011 time frame,
8 would not have to be turned over until 2016 or 2017 and
9 that would be the period of time in which Tier 4 vehicles
10 would be -- would be available in the marketplace.
11 BOARD MEMBER BERG: And since the Board might be
12 looking at a review prior to that, then we could also take
13 a look at it at that time.
14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
15 WHITE: Correct.
16 BOARD MEMBER BERG: Thank you. Thank you,
17 Mr. Porcher.
18 MR. PORCHER: Thank you very much.
19 CHAIRPERSON NICHOLS: Okay. We're next going to
20 hear from Tim Byrne, followed by Guy Prescott, and Mike
21 Self.
22 MR. BYRNE: Good morning. My name is Tim Byrne.
23 I'm from Ritchie Brothers Auctioneers. I've been asked to
24 speak on behalf of some of the customers in my area which
25 is the Central Valley. I work out of the Los Angeles
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1 office. And I've been asked specifically to review the
2 part seven, regulation H, on the impact of the resale
3 value of used equipment.
4 I provided you with a map that shows basically
5 where our buyers come from out of Los Angeles sale, but I
6 think it's a representative of our Sacramento sales as
7 well. The front page is dollars and the back page is
8 buyers. And it shows you basically where the buyers come
9 from, from around the world to buy at a Ritchie Brothers
10 in California sale.
11 In reviewing the -- in Section H, one of the
12 things I found was, it's interesting how at the beginning
13 of that section, it says that the -- there will be a
14 decrease in older equipment, but at the end the cost
15 associated with that only refers to transportation, really
16 no decrease in cost. And what we're finding already, even
17 without the regulation being implemented, is that buyers
18 are already not coming to the sale. I had one buyer in
19 Bakersfield tell me, "What's the point? If I buy a piece
20 from you, I'm going to have to replace the engine anyway.
21 So unless you're selling Tier 2 or Tier 3 engines, there's
22 no reason to go, because I'm going to have to spend money
23 on it."
24 So basically one tenet of our industry is more
25 buyers bring more sales. And if you remove the California
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1 buyers, as can you see on that map, that's two-thirds of
2 the people that come to our sales. So, absolutely,
3 there's beginning to be a decrease in the dollars. And
4 we're already seeing that.
5 As an example right now, because of the housing
6 market, we've seen a slowdown in large scrapers. And I
7 think it's a good example of what happens when you remove
8 the California market out of a sale. Yes, scrapers get
9 sold in Australia. Yes, scrapers are used in the Middle
10 East. We do sell them worldwide. We also sell them in
11 Arizona. But there's a lot of buyers in Arizona that are
12 anticipating when this regulation goes through, that
13 Arizona's going to have a similar one. So they've already
14 changed their buying patterns as well.
15 But right now, with just the slowdown in the
16 housing market, scrapers have dropped off about 20, 30
17 percent in price. And that equates to more -- to 70 to
18 $90 per horsepower loss on a contractor trying to sell one
19 today.
20 And in that mix is also Tier 2 and Tier 3
21 engines, or mostly Tier 2. Those aren't just Tier 0
22 engines. So that 70 to 90 could actually be higher than
23 that. So based on that -- and what we're seeing generally
24 in the marketplace, we feel that the impact on this. And
25 we do feel like we're kind of an outside objective third
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1 party, that it's clearly going to be higher than $10 per
2 horsepower cost to a contractor to sell his equipment. We
3 think conservatively, it's probably going to be 20 to $40
4 per horsepower, maybe on average 40 to 70, and maybe
5 realistically, it could be as high as 70 to $100 per
6 horsepower.
7 Large iron, big dozers, big scrapers, maybe an
8 anomaly, it's hard to say with loaders and worldwide
9 general equipment like loaders and backhoes. But even if
10 you average $50 a horsepower as the cost to sell used
11 equipment, when it comes to capital in updating the fleet
12 and repowering, it's going to have a huge impact on the
13 contractors.
14 CHAIRPERSON NICHOLS: Mr. Byrne, your time is up
15 and I think --
16 MR. BYRNE: Thank you.
17 CHAIRPERSON NICHOLS: -- you just finished
18 perfectly. Thank you very much.
19 MR. BYRNE: Thank you.
20 CHAIRPERSON NICHOLS: Yes. Question, Mayor
21 Loveridge.
22 BOARD MEMBER LOVERIDGE: Your -- what would be
23 your proposal or your counter or your recommendation? I
24 understand your description, I was interested in your
25 prescription.
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1 MR. BYRNE: Well, my job I was asked to review
2 that section and ask -- and answer whether I felt that the
3 $10 per hour horsepower was realistic or not. I don't
4 feel it is.
5 Where is it? It's really hard. I mean it's a
6 question for us that we're studying ever day because it's
7 going to have a huge impact one way or the other on our
8 business. I think it's probably, on average, I don't
9 think $50 a horsepower is, is, I think that's
10 conservative. I think it could be considerably higher,
11 because the majority of this equipment is going to be
12 heavy iron, it's going to scrapers and large dozers that
13 are going to take the biggest hit. And I think it's going
14 to have the biggest impact to contractors.
15 So I think it's probably going to be closer to
16 the 70 to a hundred dollar range than 50. But even if you
17 use 50, it's 500 percent higher than what you're -- what
18 you're estimating. And when you, you know, when you pull
19 in examples of companies and the profitability, that's a
20 huge impact.
21 BOARD MEMBER LOVERIDGE: That's fine.
22 CHAIRPERSON NICHOLS: Thank you.
23 MR. BYRNE: You bet.
24 CHAIRPERSON NICHOLS: Okay.
25 Mr. Self -- I'm sorry, Mr. Prescott and then
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1 Mr. Self. And that's going to be followed by Mr. Watts
2 and Mr. Downs. And then it will be time for our break, I
3 think.
4 MR. PRESCOTT: Thank you. Members of the Board,
5 staff, my name's Guy Prescott. I'm the Director of Safety
6 for Operating Engineers Local Union Number 3.
7 I would like to start by thanking all of you for
8 the work you have done with us in making some of the
9 changes proposed by staff today and encourage their
10 adoption. In particular, the change in the V-dex section
11 that equals safety with help. I appreciate the changes
12 that staff has worked with us there.
13 Also I thank you for the change for a training
14 institutes. However, I do request a change in the 15-day
15 period without which it will not work. Under definition
16 36, it shows nonprofit training institutes as falling
17 under Tax Code 501(c)(3). And these are actually
18 nonprofit educational associations, one of which falls
19 under 501(a), the other falls under 501(c)(5). Without
20 that changing and wordsmithing in the definition, it won't
21 work. So I'd appreciate if we could get that in the
22 15-day period.
23 Finally, on behalf of the members of the Job
24 Corps, and could I ask the Job Corps members to please
25 briefly stand? I'd like to thank you for the exemption
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1 for the Job Corps.
2 And with that, I will not be asking each and
3 every one of these people to speak today, as of that 6:30
4 change last night. I thank you.
5 Gentlemen, you can be seated.
6 Thank you.
7 CHAIRPERSON NICHOLS: Thank you for joining us.
8 Appreciate all those colorful shirts.
9 MR. PRESCOTT: I have one last request for you,
10 ladies and gentlemen of the Board. And that's that we
11 have jobs for these individuals when their training is
12 done. Everyone is talking about the cost of equipment,
13 the cost to the owners, the cost to the manufacturers. I
14 want to talk about the cost to the employees and their
15 families.
16 Every time this regulation speaks of reduction of
17 equipment, early retirement of equipment, downsizing of
18 numbers of piece of equipment, it should read downsizing
19 of workforce and loss of jobs. Every piece of equipment
20 has a chair and that has an operator. For every three
21 pieces of equipment, there's a laborer on the ground,
22 there's a surveyor. For every eight, there's somebody
23 oiling and fueling that. For every 12, there's a
24 mechanic. And this goes on and on.
25 The loss of employment in the construction
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1 industry is going to be huge because of this regulation.
2 The changes that have been made here do not address that.
3 The cost, the real cost of this regulation, is going to be
4 beared by the working men and women of the construction
5 industry who lose their jobs, who can't make their house
6 payments, and can't put food on the tables for their
7 family. And that is a cost, not in dollars, but in the
8 health of that family. We cannot trade the health of the
9 environment for them. They cannot be the sole bearers of
10 the cost of this regulation.
11 This industry has asked repeatedly for more time
12 and flexibility. With that, we can save some of these
13 jobs. Regardless what happens with this regulation, we
14 will unfortunately lose jobs. It will occur. But if you
15 will please give this, this industry the maximum amount of
16 flexibility and any additional time you can foresee, it
17 will help save some jobs.
18 And I appreciate all consideration you can give
19 to that. Thank you.
20 CHAIRPERSON NICHOLS: Mr. Self, followed by
21 Mr. Watts and Mr. Downs.
22 BOARD MEMBER BERG: Before Mr. Self speaks, can I
23 just confirm that we're going to address that 15-day
24 change on the definition of --
25 CHAIRPERSON NICHOLS: I have it down on a list,
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1 but I think that's likely to get fixed.
2 BOARD MEMBER BERG: Okay, so we're just going
3 to --
4 CHAIRPERSON NICHOLS: Yes. Yeah. Yeah.
5 BOARD MEMBER BERG: Thank you for -- thank you.
6 CHAIRPERSON NICHOLS: Yes.
7 MR. SELF: Good morning. First of all, I'd like
8 to thank the Board for the time this morning to listen to
9 the different arguments.
10 My name is Mike Self. I work for the Stockton
11 Builders Exchange. I represent approximately 650
12 different construction and related companies throughout
13 the San Joaquin Valley. And of those, many of them are
14 site-work people that use the off-road equipment and the
15 vast majority of those people in that field are -- would
16 be considered in the small fleet size.
17 And I've thought kind of long and hard about the
18 different arguments I might present to give you a view of
19 what the hardship for that this proposal is going to be on
20 them. And I think the best thing that I kind of came up
21 with was we all have a personal budget that we work with
22 on a monthly basis. We get our paychecks and we decide
23 how we're going to spend them. And let's just say for
24 argument's sake, that our budget says we can drive a
25 medium age Chevrolet as our vehicle. And then a third
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1 party comes in and does an evaluation of our budget and
2 says, well, in two years, you need to drive a Mercedes and
3 you say well, we can't possibly afford that, but you don't
4 have a choice in the matter. And I'm not saying I -- with
5 all respect to the numbers that are being evaluated,
6 that's just the nature of a third party kind of an
7 evaluation, I think. It's when it's your money, it's a
8 lot different than when somebody else is looking at it.
9 If I were to tell you that you needed to do that, you
10 would probably have a lot of arguments.
11 And I think that the group that I speak for,
12 they're all out there every day. They're out there today
13 busting their rear-ends to make ends meet, and they don't
14 have the kind of money to make those changes in the time
15 line of the proposal. So I guess what I'm saying is that
16 I would more than ask, I would plead with you to look at
17 the CIAQC proposal and approve that. It's a much more or
18 it's moderately more lenient than the proposal, as shown,
19 and it would give the people that I represent, you know, a
20 large number of companies in the industry, a chance to
21 comply at a more reasonable timetable.
22 Thank you.
23 CHAIRPERSON NICHOLS: Thank you.
24 Mr. Downs.
25 I'm sorry. I missed Mr. Watts. Excuse me,
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1 Mr. Watts is first. If he's here. Mark Watts.
2 Okay. Then it's your turn. Welcome back.
3 MR. DOWNS: Thank you, Madam Chair, and Board
4 members. And thank you for excusing my earlier outburst.
5 And Erik, you're probably glad I'm not your
6 father-in-law, today.
7 But anyway, look, there are a couple of
8 misconceptions flying around out there that, if I could
9 just point them out without taking from my time, it will
10 only take a few seconds.
11 Number one, it was pointed out in the slide show
12 this morning that this rule is going to save 4,000 lives
13 over the duration of the rule. Well, that is true. But
14 it leads everyone to think and everyone to state that our
15 industry is killing 4,000 people a year. That's not the
16 case. The rule -- the 4,000 people prematurely saved is
17 divided by 21, over the term of the entire 21-year rule.
18 That is 190 premature deaths eliminated. So there,
19 already, we've saved, gosh, 3800 people just by clearing
20 that one point up, because staff had that misconception.
21 They've been saying this saves thousands and thousands of
22 people a year.
23 I want to point out it's 190 according to their
24 assumptions.
25 The second is that there is no, at this point,
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1 Carl Moyer's funding available for companies like us. We
2 have 80 applications in with the Carl Moyer's group and
3 they say there is no money. There will not be one of our
4 machines repowered, refitted, none. In fact, there's so
5 many applications that it would be April before our name
6 would come to the top of the list.
7 Now, and I'm a slow talker, and I would -- so I'm
8 going to go through my statement as quick as I possibly
9 can.
10 My name is Gordon Downs. My wife and I are
11 owners of Downs Equipment Rentals in Bakersfield and Santa
12 Maria. We found out with the in-use off-road rule at a
13 Fresno workshop on February 23rd of this year. Since that
14 date, I have worked full-time every day to inform State
15 regulators and many others how this rule will adversely
16 affect our industry.
17 According to staff members Elizabeth Yura and
18 Tony Brasil, it will cost our company about $2 million
19 each year for the first three to five years to comply.
20 $2 million amounts to double our annual tax profit, our
21 annual after-tax profit. There is no regard for payment
22 of our current debt in which we are purchasing 16 late
23 model high tier machines. There is no regard for the
24 economic slowdown.
25 My wife and I met in Sacramento with the CARB
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1 staff on April 18th to discuss the matter of high
2 unaffordable costs on our company and many others like us.
3 We met with Board Members D'Adamo, Hill, Riordan, and
4 Berg. We told our story at the San Diego CARB meeting on
5 the 25th of May. We later had a meeting with staff, Sandy
6 Berg and Kathleen Quetin, in our office on June 13th to
7 show our actual cost numbers. Staff presented me with a
8 cost of compliance for the first year of $2.1 million.
9 Staff expects us to borrow $2.1 million a year for three
10 to five years to finance compliance.
11 We are not foolish enough to borrow money to
12 purchase V-dex or diesel particulate filters, which after
13 one year, have no value. Now that is because there is no
14 resale market, as confirmed by staff at our 16th meeting.
15 There is no resale market for V-dex. So lenders,
16 commercial lenders are equity lenders. They lend on
17 things that retain their value, not something that has a
18 value one day and is gone the next. Or, purchase new
19 equipment that cannot pay for itself.
20 We think many others -- excuse me. We and many
21 others think our words have fallen on deaf ears. Our time
22 has been wasted. What does it take to be heard? The CARB
23 is forcing Downs Equipment Rentals and many others in this
24 room into a very desperate situation. The cost of
25 compliance for our industry is so high that some large
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1 companies are already saying they do not intend to comply.
2 And I can produce names, but I won't. Others will reach
3 the same conclusion when they wake up to this very complex
4 and expensive rule.
5 You must keep in mind our industry has done
6 nothing wrong. The equipment we have operated to build
7 California was never illegal and did not come with a
8 factory emissions warning. So why are we being punished
9 by the very state we helped to build? We think CARB is
10 going too far and the consequences of burdening our
11 industry with an unlimited, unfunded mandate will ignite
12 an industry-wide decision to organize into a powerful
13 bargaining block. It is only then that we will secure a
14 position of equality at the bargaining table. Because
15 we're not being heard now.
16 I can only tell you the entire experience of
17 working with staff has been frustrating and a waste of
18 time and money. Most of them talk, but they have a hard
19 time listening to our suggestions. I have heard the
20 phrase "we will look into that" many times. None of staff
21 have been in business or own diesel equipment. How could
22 they know the finer details of our industry? There are no
23 exceptions for economic hardship in the regulation. You
24 are forcing our industry to band togetheR&Defend
25 ourselves.
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1 So I thank you, and I would take questions.
2 CHAIRPERSON NICHOLS: I don't think we have
3 any -- excuse me.
4 (Applause.)
5 CHAIRPERSON NICHOLS: Mr. Downs, excuse me. I
6 don't have any questions for you. I think you're a very
7 effective witness. If we don't end up agreeing with
8 everything you have said, that doesn't mean that we
9 haven't listened to you. And I think if you stick around
10 and listen to the conversation, you will find that there
11 will have been some very careful consideration of all of
12 the comments that you're making.
13 But I just have to reiterate while the audience
14 is cheering, cheering you on and you are a very effective
15 witness for your position, your statements are heartfelt,
16 and I'm sure they're sincere and accurate as best you can
17 give them. But I would just say that the reason why we're
18 here today is because this industry is a very major
19 contributor to the air that all of us have to breathe, you
20 and your potential grandchildren, if you have them,
21 despite not being Mr. Smith's father-in-law. And we all
22 are going to have to try to do the best we can to balance
23 the overriding concerns that we have, the mandate that we
24 have legally to consider the public health with the state
25 of the economy, the state of the technology, what's
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1 reasonable to do here. And that's all that we are all
2 here trying to do. So I really thank you for your time
3 and your efforts in this.
4 MR. DOWNS: Sure. And am I able to comment on
5 your comment?
6 CHAIRPERSON NICHOLS: I think we could keep this
7 going, but we're going to take a break, But you --
8 BOARD MEMBER ROBERTS: I have a question -- could
9 I ask before Mr. Downs leaves?
10 CHAIRPERSON NICHOLS: Yes, please do.
11 BOARD MEMBER ROBERTS: I think in both meetings,
12 Mr. Downs, you've been very open, you're one of the few
13 companies that I think was accessible to at least some of
14 the members of this Board. And I thank you for that. But
15 I'm having trouble with, and we're, we're struggling with
16 this as much as you are because I don't think we're trying
17 to punish anybody. What we're trying to do is end at a
18 more healthy solution, if you will. But that doesn't, you
19 know, we wouldn't be successful if it puts people out of
20 business in large numbers.
21 MR. DOWNS: Yes.
22 BOARD MEMBER ROBERTS: It's -- as the day has
23 developed, though, it seems like we're getting further and
24 further apart. This morning, and may be incorrectly our
25 staff, assumed that you had may be $400,000 that you could
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1 invest a year and they basically proposed a solution for
2 your company, just as a -- as one model --
3 MR. DOWNS: Yes.
4 BOARD MEMBER ROBERTS: -- that, if I understood
5 the testimony, approached in one year or maybe a couple
6 years, 300,000, but never got up to 400,000. And you
7 corrected them and said you didn't have 400,000.
8 MR. DOWNS: That is correct. I've made that
9 statement to staff many times.
10 BOARD MEMBER ROBERTS: But now, you're saying
11 that this rule will cost $2 million a year.
12 MR. DOWNS: Absolutely correct.
13 BOARD MEMBER ROBERTS: So the staff, in analyzing
14 your operation, forgot about whether $400,000 was a proper
15 assessment based on something you shared with them.
16 MR. DOWNS: Yes.
17 BOARD MEMBER ROBERTS: Where they're saying it
18 doesn't even approach 300,000 a year, and you're saying
19 no, it's two million. I mean, we're off by multiples of
20 ten in terms of what the -- what you're saying this is
21 going to do to you as opposed to what staff is --
22 MR. DOWNS: That is correct.
23 BOARD MEMBER ROBERTS: Okay. Is there something
24 glaring now? Forget about the 400,000. You've corrected
25 them on that.
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1 MR. DOWNS: Yes.
2 BOARD MEMBER ROBERTS: But why do you think
3 they've outlined your retrofits and other things, why do
4 we have such a discrepancy here?
5 MR. DOWNS: Well, I don't have it with me.
6 BOARD MEMBER ROBERTS: Can you put the slide back
7 up that you showed the program of how we would get to a
8 solution for Mr. Downs?
9 CHAIRPERSON NICHOLS: I think what we're dealing
10 with here could be also sort of a worse case scenario in
11 terms of the business that Mr. Downs has and maybe the
12 staff can describe it a little bit why he think he doesn't
13 represent either the average or even the most common
14 scenario of most fleet operators, if we're really going
15 the take the time to try to delve into this inconsistency.
16 MR. DOWNS: We have a typical fleet. Our fleet
17 tier average is typical of the state of California. We
18 have 50 percent Tier 0. We have 33 percent Tier 1. We
19 have 18 percent Tier 2. We have very few Tier 3s. We are
20 typical. We're no different than about, I'll say, 80
21 percent of the people in this crowd.
22 CHAIRPERSON NICHOLS: But you don't agree that
23 you have a choice, whereas, the choice -- I mean, you're
24 choosing not to go with the low cost alternative.
25 MR. DOWNS: Well --
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1 CHAIRPERSON NICHOLS: That's your choice.
2 MR. DOWNS: I have asked staff, these people
3 right here, Elizabeth Yura, Tony Brasil, to do the most
4 cost effective spreadsheet on us complying that they could
5 possibly dream up, even with rosy scenario assumptions. I
6 have those cost spreadsheets with me. Tony Brasil gave us
7 one on our 13th meeting of $2.1 million the first year to
8 comply. Over 700,000 of it was for V-dex. The other part
9 was to purchase 15 five-year-old machines and sell off 15
10 Tier 0 machines. We can't do that. Tony has never
11 purchased a machine in his life. I've purchased hundreds
12 and hundreds of machines. Like from Ritchie Brothers, the
13 fellow that was here testifying earlier. I know what I'm
14 doing when I buy a machine.
15 But what Tony is recommending us to do cannot be
16 done. It's just, if you not -- if you're not in this
17 business, you don't really know how it operate. So I'm
18 just giving you some facts. And everyone I've met with,
19 if you can show where I've been dishonest by one word, I'd
20 like to you point it out to me right now.
21 BOARD MEMBER ROBERTS: Mr. Downs, nobody's --
22 nobody's saying you're being dishonest. What we're trying
23 to do is get to the -- and understand the differences here
24 in the conclusions. This chart was put up earlier, and I
25 heard you take exception to the 400,000.
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1 MR. DOWNS: Yes.
2 BOARD MEMBER ROBERTS: But this -- the successive
3 chart here, the slide, made the claim that this would not
4 be over $300,000 in any given year. And you're saying
5 that that's -- that's not the case.
6 MR. DOWNS: I can produce right now, if you'd
7 like to see it, Tony Brasil's --
8 BOARD MEMBER ROBERTS: No.
9 MR. DOWNS: -- spreadsheet.
10 BOARD MEMBER ROBERTS: I don't want to see Tony
11 Brasil's --
12 MR. DOWNS: Okay.
13 BOARD MEMBER ROBERTS: -- spreadsheets. I
14 just --
15 MR. DOWNS: But that's the most cost-effective
16 way for us to comply because he said so.
17 BOARD MEMBER ROBERTS: Well, he's saying that
18 this is, this is a model of that. Does that -- --
19 MR. DOWNS: That's a theory that if -- I'll tell
20 you what, this is my offer. I will put Tony Brasil on my
21 payroll. I will double -- I will double his salary if he
22 can show us how to comply with that chart up there and not
23 break us.
24 (Applause.)
25 MR. DOWNS: Or three times.
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1 CHAIRPERSON NICHOLS: I think -- I think this
2 is -- that could prove to be --
3 MR. DOWNS: We've got nothing to lose.
4 CHAIRPERSON NICHOLS: That could prove to be very
5 cost-effective.
6 MR. DOWNS: I think he's on. Tony.
7 CHAIRPERSON NICHOLS: But I think, I think we've
8 exhausted the amusement factor here and we're really not
9 making any progress in terms of actually getting to a
10 resolution on this issue.
11 And so at that point, you've used up your time.
12 I appreciate it.
13 MR. DOWNS: Okay.
14 CHAIRPERSON NICHOLS: We have heard you.
15 MR. DOWNS: Sure.
16 CHAIRPERSON NICHOLS: We will be thinking about
17 what you said as we move forward and listen to other
18 witnesses. We're giving our court reporter her ten-minute
19 break and everybody else a ten-minute break --
20 MR. DOWNS: Okay.
21 CHAIRPERSON NICHOLS: -- and we'll be back --
22 MR. DOWNS: Thank you very much.
23 CHAIRPERSON NICHOLS: -- at a quarter of.
24 Thank you.
25 (Thereupon, a recess was taken.)
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1 CHAIRPERSON NICHOLS: If we can get people back
2 in their seats and the Board back to the dais here.
3 Everybody who testifies now, you know that you're between
4 yourself and the lunch break, so that's an incentive for
5 people to be -- to be crisp in their remarks.
6 Okay. We're going to be calling Sue Home,
7 followed by Harvey Beigle or Beigle, I'm not sure how you
8 pronounce your name. And Mary Pitto. Actually, we have
9 two people from RCRC. Maybe they want to go together.
10 Sue Home and Mary Pitto.
11 MS. HORNE: Sue Horne.
12 CHAIRPERSON NICHOLS: Horne, sorry. Horne.
13 MS. HORNE: Good morning, Madam Chair and members
14 of the Board. I am Sue Horne, a Supervisor in Nevada
15 County and also Chair of the Regional Council of Rural
16 Counties, which represents 30 rural counties in
17 California.
18 On behalf of the member counties, I'd like to
19 express our appreciation for your staff's efforts to
20 address our concerns.
21 We are asking you to consider three additional
22 provisions today. Please consider increasing the low use
23 vehicle exemption hours in small fleets and municipalities
24 in low population counties. RCRC had initially requested
25 the hundred hours be increased to 300 hours. 100 hours
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1 represents only 12 and a half eight-hour working days out
2 of a year. To provide additional relief to small business
3 owners and low population counties, we ask the Board to
4 consider increasing the threshold to minimally 200 hours,
5 ideally to 300 hours.
6 For off-road equipment use for snow removal
7 operations, in addition to other uses, please exclude the
8 hours used during snow removal operations when determining
9 low use status of a vehicle. This provision was included
10 in the public fleet rule for the on-road diesel vehicles
11 and we request the same provision in the off-road rule.
12 Additionally, this proposed regulation already excludes
13 hours used for emergency operations when determining low
14 use status and we consider snow removal to be emergency
15 operations.
16 And finally, and the most important, please
17 extend the captive attainment area provision to counties
18 that are classified as non-attainment strictly due to
19 transport. There are six or seven counties that fall
20 under that classification. Meeting NOx reductions is a
21 considerable financial impact to our small to medium
22 fleets which will have a negative economic impact to our
23 rural counties.
24 Compliance with the NOx requirements of the
25 proposed regulations in those counties will not
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1 significantly reduce the emissions and will not bring
2 those counties into attainment. The request -- this
3 request is supported by certain local air districts and
4 CAPCOA.
5 Again, RCRC would like to express our gratitude
6 to you and to your staff for your efforts to understand
7 the constraints that rural counties face.
8 Thank you very much for your consideration.
9 CHAIRPERSON NICHOLS: Thank you, Supervisor
10 Horne.
11 Any questions?
12 BOARD MEMBER RIORDAN: Well, I might just ask
13 staff for a response. I'm trying to think about snow
14 removal. Snow removal, usually I think of it as a truck
15 that's got a blade on the front. Maybe they use
16 something -- you probably get a lot more snow where you
17 are than where I live, but usually it's a -- it's a truck
18 that I -- I've used all these years.
19 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
20 There are a variety of --
21 BOARD MEMBER RIORDAN: Are there?
22 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
23 -- types of snow removal equipment, like you said, it
24 could be a truck with a blade but also a vehicle with an
25 auger-type attachment in the front that's permanently
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1 attached to the vehicle. The regulation does have
2 provisions that would exempt the dedicated snow removal
3 equipment, but there are other types of equipment, like
4 loaders that might load salt into a truck or motor graders
5 that would use -- could be used for construction, but also
6 be used to facilitate snow removal. Those we have not
7 defined as dedicated snow removal equipment types.
8 BOARD MEMBER RIORDAN: Thank you.
9 CHAIRPERSON NICHOLS: Okay.
10 BOARD MEMBER CASE: Madam Chair, if I might,
11 also. Could we have a response in regards to the
12 extension for small counties for the captive attainment
13 element for those counties that actually are out of
14 attainment by virtue of being downwind from a -- an area
15 that's increasing their pollution, but in and of
16 themselves as a county they're not having that level of
17 pollution?
18 CHAIRPERSON NICHOLS: This is a SIP world, I
19 think. Ms. Terry.
20 DEPUTY EXECUTIVE OFFICER TERRY: Yes, we did look
21 carefully at this issue and as we face the eight-hour
22 ozone standard, some of these smaller downwind areas have
23 some of the highest ozone values. And as we look at the
24 challenge of meeting the ozone standard, every ton of
25 reduction counts. And we consider under our transport
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1 policy that it's a shared responsibility for the locals
2 and the upwind areas to reduce emissions as such as
3 feasible.
4 BOARD MEMBER CASE: So they would have problems
5 either way with the ozone problems. So if they're not
6 reducing their own that will be even more significant in
7 terms of impacts to businesses?
8 MS. HORNE: Well, the point being that reducing
9 or having the NOx requirements on the counties that only
10 are in non-attainment because of the transport issue, by
11 eliminating the NOx requirement, you are going -- or
12 keeping the NOx requirement, you are not going to achieve
13 attainment for those counties whether or not you have this
14 requirement in place. It's a significant financial impact
15 to our rural counties and our rural public fleets and
16 private as well, by having the NOx requirement. And
17 you're trying to affect an issue that will not have the
18 effect that you want by keeping the NOx requirement on the
19 transport counties. And so we're asking you to take that
20 into consideration, and, and, and since you're not going
21 to be getting the benefit that you're -- that you're
22 seeking, but there is a substantial economic disadvantage
23 and impact to our rural counties, we're asking you to take
24 that into consideration.
25 CHAIRPERSON NICHOLS: Thank you.
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1 MS. HORNE: Thank you.
2 CHAIRPERSON NICHOLS: That's actually an item of
3 some dispute in terms of the technical aspects of what you
4 just said, but I don't think that we need to debate it at
5 the moment.
6 We're going to hear, I think, from Ms. Pitto
7 first just because you're also with RCRC, and then we'll
8 go back to Mr. Beigle.
9 MS. PITTO: Thank you. And good morning, Madam
10 Chair, and members of the Board. I'm Mary Pitto with the
11 Regional Council of Rural Counties. And RCRC has been
12 working with your ARB staff over the last couple of years,
13 working on the regulation to make it reasonable for our
14 rural counties to be able to comply with.
15 We recognize and appreciate the provisions that
16 have been included that do help our counties, and as you
17 heard from Supervisor Horne, we still have some remaining
18 issues. I won't elaborate on those any more. I just
19 wanted to take this opportunity to express our
20 appreciation of ARB staff working with our rural counties.
21 Throughout the process, your staff has been very
22 cooperative and availed themselves to be -- to meet with
23 our county representatives, in our counties, to help
24 understand what their operations are. And I just want to
25 extent our appreciation, especially to Kim, Tony, and
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1 Erik.
2 And also let you know that we will continue to be
3 available for -- to work with your staff and we are
4 committed to be a resource during implementation of this
5 rule for outreach in our rural counties.
6 Thank you.
7 CHAIRPERSON NICHOLS: Thank you very much.
8 Okay. Beigle, followed by Gregg Albright and
9 Joseph Lyou.
10 MR. BEIGLE: Thank you. And thank you, Board,
11 for taking our comment this morning.
12 My name is Harvey Beigle. I'm the president of
13 Reed Thomas Company in Southern California. We're a
14 mid-size general engineering contractor that, up until
15 April, was in the mid-size category. But when that
16 category got moved from 20,000 horsepower down to 5,000
17 horsepower, we're sitting at about 12,000 to 13,000
18 horsepower.
19 I want to answer a couple things that the Board
20 members brought up today. I heard the words "level
21 playing field," being the ability to pass on the costs,
22 triennial observation, triennial example, and job loss.
23 Whenever you have steps in a plan, it's not
24 level. It's not a level playing field, it's got steps in
25 it. So, for example, for my company, we compete about 70
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1 percent of the time with what is now still the medium-size
2 fleet, under 5,000 horsepower. But they have Carl Moyer
3 funding available to them for several years, of which we
4 have no funding available to us.
5 And then I also heard in testimony today about a
6 new option of a SOON program for those districts that are
7 out of attainment. And I think that sounds great
8 conceptually. But if you think about, there's a program
9 for the 20,000 and up. There's a program for the 5,000
10 and under. That's leaving the companies of my size, the
11 5,000 horsepower to the 20,000 horsepower, with no options
12 for subsidized funding what over.
13 The next thing I want to talk about is when we
14 look at the cost to do our fleet. And everybody seems to
15 understand now that the main cost is in the first four or
16 five years. That's the because most of the fleets are on
17 the BACT method, the best available control technology.
18 So that requires you to retrofit 20 percent of your fleet
19 every year. So in five years you're a hundred percent
20 retrofitted. So you're paying that huge load cost in
21 those first few years. How -- and staff's costs and my
22 costs in dollars per year came out very close. The
23 difference is they have suggested that we borrow about
24 three years average profits in order to soften that load
25 the first years and then divide the costs by 21 years to
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1 spread the cost out to make it look or to -- because they
2 believe there's an -- there's a gain, like a cost benefit
3 approach. The problem is the cash has to come out of
4 pocket in the those first few years.
5 So speaking on that, what I want to get to here
6 is an off-ramp. When staff first put the plan out, and
7 even lately, their off-ramp was the BACT, the BACT method
8 or the best available control technology. Well, now, they
9 recognize in their staff report that that is the main
10 program that we're going to be on. There's very few
11 people that are going to be immediately on the fleet, the
12 fleet average. So if that's the main plan, that's not an
13 off-ramp or it's not a safety valve as they're calling it
14 in their plan.
15 So what we need is in that time period, if we
16 cannot spend the kind of money that it takes to do it, I
17 suggest that in a year if we're required to turn over
18 eight percent, in lieu of that, without repowering or
19 without replacing, but if you eliminate 150 percent of
20 that from your fleet. So if you eliminate that much
21 horsepower from your fleet, you've taken that pollution
22 out of the air, that those tractors are no longer legal in
23 California, so the state and the area has gained from that
24 loss of pollution. That year, those people be exempt from
25 the 20 percent exhaust retrofit.
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1 Thank you.
2 CHAIRPERSON NICHOLS: Thank you.
3 Mr. Albright. Welcome.
4 MR. ALBRIGHT: Good morning. Thank you,
5 Chairperson Nichols and the Board. I appreciate the
6 opportunity to come before you.
7 Gregg Albright, California Department of
8 Transportation. Also would like to note that Director
9 Will Kempton would have liked to have been here today, but
10 he's testifying before the California Transportation
11 Commission down in Glendale. I also want to be -- point
12 out that we have been very impressed with the Board and
13 the staff's investment of time and energy in this whole
14 discussion. And I also want to thank the construction
15 industry. They have put an enormous amount of time and
16 effort into providing information and having a very strong
17 dialogue.
18 On the 25th, we had specifically asked that there
19 be more time to analyze this so that there's better
20 informed decision-making. We asked for collaborative
21 discussions and an exchange, particularly on cost issues,
22 between staff, and all that has happened. And I want to
23 let you know that we really appreciate that. You have
24 gone the extra mile to be informed, and we have seen Board
25 members and staff really put their hearts and soul into
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1 this effort and have done an enormous amount of research
2 to be better informed.
3 Caltrans understands necessity of in-use off-road
4 diesel vehicle regulation, and we are committed to work
5 with the Board to accomplish this in a productive and
6 cost-effective manner. We appreciate also that the Board
7 recognizes that this impacts the construction industry.
8 We expect project costs to increase. We expect the fact
9 that a portion of this business practice will have to be
10 moved on to private project costs. We also understand
11 that there will be some small business contractors that
12 are impacted by this and that will reduce the capacity of
13 the industry. And that could also turn around and have
14 impacts on the project delivery of our transportation
15 projects.
16 We can't really fully assess the impacts at this
17 time of these on the program at-large, but we know that
18 you have taken that into consideration and that's all
19 we've asked.
20 We are particularly pleased that you've
21 considered taking the horsepower threshold for small
22 fleets and moving it from 15 to 25 horsepower. This will
23 have very complimentary impact on the small contractors
24 and we feel that this reduces some of our concerns that we
25 had concerning the small business contractors and their
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1 opportunities towards economic -- their economic
2 opportunities.
3 We also are very supportive of some of the
4 discussions that occurred between the South Coast and San
5 Joaquin Air Quality Districts and the idea of incentives
6 and early compliance. We think that's very positive and
7 we see that as a -- we hope that goes further and the
8 opportunities are there to move compliance quicker.
9 And also in your staff report on, I think you
10 label it, "Key Outstanding Issues," you noted that there
11 continues to be a debate over availability, cost,
12 durability of the technology necessary. And we're very
13 supportive and we have gone on record of the idea of
14 having these check-in periods. And I think you've
15 suggested '09, '13, and '17 as points to check-in and see
16 how things are doing. We want to just say that is a good
17 business practice and we support that. We think that's a
18 very wise course of action.
19 We stand with Governor Schwarzenegger in moving
20 towards improving the quality of life here in California.
21 And so the department, in partnership with ARB, as well as
22 regional and local transportation agencies, we're going to
23 pursue our goals towards air quality by decreasing
24 congestion, reducing the use of single occupant vehicle
25 use and increasing mobility choices. We're going to try
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1 to do our part to bring about change, significant change
2 within California.
3 So with that, I thank you for this opportunity to
4 speak.
5 CHAIRPERSON NICHOLS: We appreciate your support.
6 Thank you for coming.
7 Dr. Lyou, followed by Seyed Sadredin and Sean
8 Edgar.
9 DR. LYOU: Good afternoon, Madam Chair, members
10 of the Board. Thank you. My name is Dr. Joseph Lyou. I
11 serve on the Governing Board of the South Coast Air
12 Quality Management District. I am also the Co-Chair of
13 the Cal/EPA Advisory Committee on Environmental Justice,
14 and I am the Executive Director of the California
15 Environmental Rights Alliance, a nonprofit organization
16 dedicated to achieving environmental justice and improving
17 community health in California. However, today, I'm here
18 testifying solely on behalf of South Coast AQMD.
19 The decision you make today will determine
20 whether or not the South Coast can achieve the deadline
21 for federal PM2.5 standards and your decision will also
22 determine if the South Coast has any chance at all at
23 meeting the more stringent 24-hour PM2.5 standard in 2019,
24 the maximum allowable date.
25 We truly appreciate the hard work of your staff
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1 in developing this complex and far-reaching regulation to
2 address in-use off-road diesel emissions. We support an
3 approach to establish a stringent baseline regulation
4 applicable statewide and a limited scope, a limited scope
5 specific enhancement included by the staff proposal as
6 Attachment 1 to meet the local attainment needs in the
7 regions worst air quality such as South Coast. And
8 obviously we'd be open to including other air districts as
9 well. I think we would propose some minor tweaking to the
10 language on cost effectiveness, but staff from the South
11 Coast will testify to that effect later today.
12 The proposed enhancements have been described by
13 your staff. They're intended to ensure the certainty and
14 timing of the emissions reductions that are critical to
15 the well being of our residents. It is important to
16 recognize that the off-road equipment and the on-road
17 trucks represent the top two sources of NOx in the South
18 Coast inventory and they contribute to the non-attainment
19 of the health standards, both for ozone and particulate
20 matter.
21 In Southern California, our PM2.5 levels are some
22 of the worst in the country, resulting in thousands of
23 premature deaths annually by your own calculations. In
24 addition to this public health crisis, there is a horrible
25 economic toll as well as in days lost, asthma attacks, and
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1 hospital admissions due to lung and heart damage.
2 Obviously, timely cleanup of the legacy diesel fleets
3 including off-road engines is a key component to the
4 remedy. Your regulation will literally shape the
5 livability of our communities for years to come.
6 We recognize that a local enhancement, the opt-in
7 option, will increase costs for affected fleets.
8 Therefore, last week, our Board's administrative
9 committee, which includes the chairman of our Board and
10 the chair of each of the standing committees at the
11 agency, unanimously agreed to recommend that the Moyer
12 program funding and other public funding totaling
13 $120 million during a four-year period be set aside to
14 assist fleets affected by the proposed enhancements to the
15 statewide regulation. But only if the proposed
16 enhancements become regulation and they help close the gap
17 in our region between the air quality improvements we've
18 identified and those that we have to have in order to
19 comply with the State Implementation Plan.
20 Thank you, again, for considering our proposed
21 enhancement and for adopting a rule that will provide
22 great, tremendous -- great and tremendous public health
23 benefits and greater certainty in our ability to comply
24 with federal PM2.5 standards.
25 CHAIRPERSON NICHOLS: Thank you very much. And
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1 thank you for coming all this way and for your service on
2 the AQMD Board. That's great.
3 Next, Mr. Sadredin.
4 MR. SADREDIN: Good morning, Madam Chair,
5 Members. Seyed Sadredin, I'm the Air Pollution Control
6 Officer and Executive Director for the San Joaquin Valley
7 Air Pollution Control District.
8 First of all, I want to express our gratitude and
9 appreciation to you, Madam Chair, for your recent comments
10 of concern and support for the Valley. Also, the similar
11 comments from the Governor and the rest of the Board
12 members. It is encouraging that we can count on your
13 support to bring the Valley into attainment, given our
14 unique and very difficult challenges and the fact that
15 your Board, the state of California, has control over 80
16 percent of the pollution that we need to reduce. I also
17 want to assure you that all of us in the Valley, and by
18 that I mean the district staff, the district governing
19 Board, all valley residents and businesses, share your
20 view that 2024 for attainment of the eight-hour ozone
21 standard is not acceptable. And we need to do everything
22 we can to strengthen the SIP and get there sooner.
23 Today, I believe, is the first opportunity for
24 your Board, a major opportunity for your Board to back
25 those sentiments with real action. So with all due
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1 respect, we have three recommendations for your Board.
2 First, to adopt the enhanced provision to allow
3 South Coast and San Joaquin to opt into these enhanced
4 requirements. This is entirely consistent with the dual
5 path fast track approach that our Board has adopted and we
6 think we can participate, both regulatory and financially
7 in that program.
8 Two, we ask that your Board also allow at least
9 Bay Area Air Quality Management District to participate in
10 this program. I have talked to my colleagues in Bay Area.
11 They have no objection to that. And given the fact that
12 the district is in extreme non-attainment. Every ounce of
13 emission reductions count. And given the transport from
14 the Bay Area, that is something we need to deal with and
15 have that tool in our arsenal.
16 And finally and most importantly, I ask that your
17 Board today with your decision to approve this rule with
18 the enhancements also direct your staff to commit
19 $5 million per year to match our contribution to this
20 enhanced program. We believe in the Valley we need about
21 $10 million per year for a total of $40 million compared
22 to the South Coast's need of $120 million. And at this
23 point, we have $5 million per year from local funds to
24 contribute into that program. Anything more than that
25 would mean that we have to shift and divert expenditures
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1 from other sources that reduce emissions into this program
2 and, therefore, we will not see the net benefit in air
3 quality.
4 Therefore, we ask that you direct your staff to
5 come up with that matching fund out of the statewide Moyer
6 program over which your Board has total discretion. You
7 have about $14 million a year available to you and we ask
8 that, dedicate $5 million of that to help projects like
9 this in the Valley. And they will have multi-district
10 benefit because the proposal only requires that these
11 operations be in the Valley and to participate in this
12 district only 50 percent of the time, and we will get
13 multi-district benefits. Therefore, we hope for your
14 support on this matter.
15 Thank you very much.
16 CHAIRPERSON NICHOLS: Thank you for your
17 comments.
18 Questions? Yes.
19 BOARD MEMBER D'ADAMO: Well, just want to thank
20 you for your support of this SOON proposal. And I totally
21 agree that this is a good first step in the right
22 direction of beating the SIP.
23 As far as the commitment, I don't think that it's
24 necessarily appropriate through this resolution, it's not
25 before us on Carl Moyer, but I would pledge to do anything
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1 I can to work with staff and CAPCOA and the other
2 stakeholders to see what we can do to get you those
3 additional dollars.
4 MR. SADREDIN: Just -- I may mention that for
5 PM2.5, we -- it appears based on our preliminary analysis
6 that we may be about three to four tons a day short in
7 terms of meeting the deadline by 2015. So as you consider
8 that deliberation, we hope that we come up with an
9 objective based methodology to distribute those funds as
10 opposed to the pork barrel project where you just divvy up
11 the money statewide.
12 So thank you very much.
13 CHAIRPERSON NICHOLS: That's good advice. Thank
14 you.
15 All right. We'll now hear from Mr. Edgar,
16 followed by Katie Lefkowitz, and Donna Fox.
17 MR. EDGAR: Madam Chair and members, good
18 afternoon. Sean Edgar, Executive Director of the Clean
19 Fleets Coalition, collaboration of Valley family-operated
20 businesses doing businesses in all eight counties of the
21 San Joaquin Valley Air District. I'm here to speak in
22 support Mr. Sadredin's comments just delivered to you
23 relative to adopting the SOON program. And we appreciate
24 Ms. D'Adamo's commitment to try to achieve as much
25 leveraging of funding as could be possible, as described
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1 under that program.
2 The SOON proposal for the San Joaquin Valley and
3 also beyond represents -- merits your support and
4 represents a great opportunity to, for early implementers
5 of this regulation. It's regrettable that the expanded
6 SOON relative to other air districts -- apparently the
7 agreement between staff and the other air districts may
8 not have fully jelled.
9 But specific to San Joaquin Valley, we think it's
10 important because the businesses, family-operated
11 businesses that are part of our coalition in San Joaquin
12 Valley, come with the unique experience of implementing
13 the trash truck rule which over the past seven years we've
14 noted there are few successes and failures, which I'd like
15 to briefly address so we can draw upon and to create a
16 more achievable rule here.
17 First off, we're at the midpoint of this rule.
18 This was directed at on-road vehicles, solid waste
19 collection vehicles, numbering approximately 12,000 in the
20 state of California. Look back provisions such as you're
21 looking toward adopting in this rule are very helpful in
22 order to gauge progress over time. I'd offer that the
23 look back provisions in our solid waste rule has been
24 helpful, albeit, it's a little bit delayed. The most
25 current -- we're only able to get kind of information from
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1 what occurred two years ago, but if the indicators from
2 what occurred during 2004 are any helpful and your staff
3 consolidates that information and issues it on a regular
4 basis, but we're kind of two years behind.
5 But the pass-through provision and industry here
6 will have some concern as do our solid waste collectors
7 because since we've been implementing the rule since 2003,
8 we find that the pass-through has been hit and miss. In
9 the case of your staff keeps, a survey in 2004, 24
10 collection companies throughout the state were fortunate
11 to be able to pass the cost through. And I'll single out
12 Supervisor Case. In Fresno County, you had the courage in
13 your capacity as a supervisor to allow collectors in that
14 area for this on-road vehicle project to pass through
15 increased costs. However, there were seven out of the
16 subsection or somewhere around 30 percent of the folks who
17 requested were denied and that's a little bit difficult
18 because our expectation and your staff's expectation is
19 that, in all cases, industry will figure out how to pass
20 it through. So just as an indicator of the on-road
21 project, we've had some successes and some lack of
22 success.
23 Moving on, like Mr. Cackette observed, the Moyer
24 rules specific to large fleets will dry up as a result of
25 your action. And so that's why SOON will be very critical
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1 to try to try and allow for folks who want to implement
2 early because our experience was Moyer funds dry up.
3 Moyer was not enough and it was not accessible to -- once
4 the rule got done.
5 Just wrapping up, you're generally robust
6 suppliers for the technology; however, there was a
7 technology off-ramp that the executive officer implemented
8 in the context of the trash truck rule that was
9 successfully implemented, so CARB stuck by its word on
10 giving industry a break when a break was needed. However,
11 it took a month of Sundays for our collection companies to
12 figure out.
13 So just in wrap up, back to Mr. Sadredin,
14 leveraging early dollars as a result of the SOON program,
15 I think, will be very helpful. We appreciate the Board's
16 commitment to make that happen because the Valley families
17 and businesses that are part of our coalition feel that
18 this is an important program, but it needs to be made
19 achievable. And the number one achievement is not so much
20 the technology filling in. I think that will happen over
21 time with an off-ramp, but the funding is the key element.
22 And so appreciate your attention this morning. Available
23 to answer any questions you may have.
24 CHAIRPERSON NICHOLS: Thank you. You just made
25 it in your three minutes, by a second or two.
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1 All right. Ms. Lefkowitz, and then Ms. Fox, and
2 Andy Katz.
3 MS. LEFKOWITZ: Good afternoon. My name is Kate
4 Lefkowitz, and I'm the California Outreach organizer with
5 the Union of Concerned Scientists.
6 I'm here today to urge the California Air
7 Resources Board to adopt today's off-road regulation in
8 the state of California. Today's proposed rule has been
9 developed over many years and it is essential that CARB
10 makes a commitment to adopt this rule today. I strongly
11 support the off-road rule regulation, as it is vital to
12 California's air quality environment and public health.
13 I spent 18 years living in the Los Angeles area.
14 A part of the state where extreme air pollution not only
15 impacts daily life, but the health of those who are most
16 vulnerable such as young children and the elderly. My
17 mother spent significant time working as a registered
18 nurse at Martin Luther King, Junior, Harbor Hospital in
19 South Central Los Angeles. As an RN in the pediatrics
20 unit, my mother constantly cared for children who are
21 suffering from air pollution-related illnesses like asthma
22 and other respiratory problems. Area pollution has real
23 impacts on real people. They are not just statistics.
24 The rule before you today will save lives and
25 prevent lung and heart illnesses throughout the state of
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1 California. This off-road regulation will prevent 1600
2 hospital admissions due to cardiovascular causes and the
3 savings in avoided deaths and health care costs will add
4 up to 18 to $25 billion. Construction workers, children,
5 and adults who live and work near construction sites will
6 benefit from a reduction in exposure to harmful levels of
7 toxic diesel exhaust creating a healthier work environment
8 and cleaner air.
9 I would like to specifically comment on some of
10 the options that are being considered by the Board today.
11 Implementing the proposed off-road regulation is necessary
12 to help attain clean air throughout the state. But some
13 air districts are in need of even further reductions. The
14 proposal to allow air districts to opt in to a program to
15 achieve greater emission reductions coupled with incentive
16 funding is a good idea. We urge the Board to allow this
17 option and to be open to all area districts to get greater
18 emission reduction from off-road equipment.
19 The proposal before you has been developed over
20 three years and incorporates numerous flexibilities and
21 exemptions to ensure companies have a feasible pathway to
22 compliance. Annual compliance targets for direct PM are
23 critical to reducing exposure to those living and working
24 near diesel off-road equipment. The staff's proposal with
25 annual enforceable targets has been discussed throughout
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1 the rulemaking process and ensures that a constant steady
2 level of investment in clean-up technology occurs.
3 We urge you not to put communities at greater
4 risk by removing annual compliance targets. Additional
5 flexibility should not come at the expense of public
6 health.
7 Thank you for the opportunity to comment and
8 considering this essential regulation for the state of
9 California. We urge your support on this regulation.
10 CHAIRPERSON NICHOLS: Thank you.
11 Ms. Fox, and then Mr. Katz.
12 MS. FOX: Good afternoon, Madam Chair and Board
13 members. My name's Donna Fox. I'm the Regulatory Policy
14 Specialist for the California Nurses Association. And I'd
15 like to focuses on health. We haven't heard enough about
16 health yet this morning. As we have heard mentioned in
17 different ways, though, health -- emissions are dangerous
18 and can cause serious health impacts. Predominantly in
19 the respiratory system. Unfortunately -- fortunately, I
20 am a nurse. Unfortunately, I have taken care of many
21 individuals who are children, adults, and elderly who
22 suffer both respiratory problems and cardiovascular
23 problems.
24 We need to focus on preventing disease. There
25 was a discussion earlier about the 4,000 fewer premature
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1 deaths over the course of the rule, which I'm here to
2 support. That number is a large number. What is at least
3 as important is the amount of disease we can prevent. The
4 amount of illness we can prevent. The amount of
5 disability that we can prevent. All of these are
6 achievable.
7 Many communities are especially hard hit by poor
8 air quality. Particularly urban areas where the
9 population is highly concentrated. They're impacted by
10 construction when there may be a small lot with a large
11 building, so this small, short-term exposure has a major
12 potential long-term health impact on thousands of
13 individuals who live within a one mile radius. Many low
14 income populations and other vulnerable populations live
15 right near highways. So in addition to the highway
16 exposure, they also have the exposure from the
17 construction that is occurring, underway across the state.
18 There are 110,000 fewer cases of asthma-related
19 deaths that we could hope to experience through the
20 benefit of this rule. Also 2,440 fewer hospital
21 admissions and, importantly, also, fewer lost work days.
22 With the emphasis on cost and cost savings, it's
23 important to look at the relationship between individual
24 and public health and population health and the economy.
25 When children or adults or elderly are ill or disabled,
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1 they have the economic lost impact in the workforce, but
2 many people here would relate to the fact that you are all
3 caring for other generations. You're caring for maybe
4 younger generations or older generations. And so the
5 extent to which any one of the generations is impacted by
6 poor air quality -- and we've talked about even very young
7 children have significant disease which will affect them
8 across their life span.
9 So I'd like to thank the person who presented
10 this study earlier today, and I'm pleased that it's being
11 published in the Journal circulation. And it's of
12 particular use, I think, because it's talks about
13 short-term impact. I think sometimes it's hard to attend
14 to prevention because it's looked at as the consequences
15 will be down the road. Well, I think it was well
16 illustrated that the consequence and health consequence
17 and economic consequence due to illness occurs in the
18 short term and the long term.
19 Thank you for your attention. Do you have any
20 questions?
21 CHAIRPERSON NICHOLS: Thanks, Ms. Fox.
22 MR. KATZ: Good afternoon, Chairman Nichols and
23 Board members. My name is Andy Katz. I'm the Director of
24 Air Quality Advocacy for Breathe California, a lung health
25 advocacy organization.
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1 Californians need this regulation for protecting
2 public health and our environment. The 4,000 premature
3 deaths that this regulation will prevent doesn't just talk
4 about, doesn't just mean that that's the only health
5 benefit from this regulation. It doesn't include that
6 tens of thousands of people who experience asthma attacks
7 and hospitalizations every year. Hospitalizations are the
8 number one cause of school absences and they're also --
9 it's a significant cost on our health care system. I'm
10 not sure if this was the number that your staff used in
11 the study, but $15,000 is the cost of an asthma
12 hospitalization. And if we're talking about the overall
13 burden on the public health care system and health care in
14 general, that's a very significant cost. And so in
15 addition to preventing lung disease, preventing
16 cardiovascular disease, this is a very important rule for
17 Californians. And this is a very far reaching rule.
18 Seventy-five percent of diesel emissions reduced. And
19 that's because this is really one of the last sectors to
20 get regulated. And many other sectors that pollute the
21 air have already had the -- have already had regulations
22 put on them by government, and it's time for the
23 construction industry to also come forward and do their
24 part.
25 The staff proposal balances the economy, the
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1 environment, and public health. The economic models that
2 the staff have shown you are based on actual budgets.
3 They show you that it's a very, very tiny portion of the
4 overall construction revenue, .3 percent of the overall
5 revenue spent in California is what this proposal will
6 cost them. And it explains the discrepancy. Why are you
7 hearing different numbers? Why did you hear different
8 numbers in San Diego?
9 You're hearing different numbers because the
10 worst case scenario is being put out to you, but the rule
11 gives you flexibility. So you really can do that game
12 with numbers. The staff have shown you where that
13 discrepancy comes from, that the flexibility is built into
14 the rule. And if you look at the model with all of the
15 flexibility and all of the options that are in the rule
16 for using emissions control technology, avoiding complete
17 changeover at, all at once, and also using financing
18 techniques. Businesses are able to borrow. But somebody
19 who's impacted by lung cancer or asthma, they can't take
20 out a loan. This is health. This is public health. And
21 that's why the staff have been able to show you reasonable
22 numbers and reasonable regulations.
23 The South Coast and other air districts need this
24 rule also to meet their state deadlines and federal air
25 quality standards. And that's why this rule is also
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1 needed.
2 Reducing reporting hurts public health, and
3 there's no justification in terms of costs.
4 I'll wrap up just saying that 12 percent
5 emissions reduction is not justified and will end up
6 causing increased health effects. And I encourage the
7 Board to keep annual reporting.
8 Thank you.
9 CHAIRPERSON NICHOLS: Okay. Thank you. I need
10 to make people aware of the fact that we have now heard
11 from 18 witnesses out of a list of 61. So we're not doing
12 as well as I had hoped in terms of making it through the
13 agenda. We are going to take a lunch break. And I
14 suspect there will be people coming in who will want to be
15 added to the list. But if you find that someone else has
16 already said what you were planning to say or you think
17 you could shorten your time from three minutes to two and
18 a half or even two, that will, I think, contribute to the
19 overall quality of the decision-making here.
20 So I ask you to think about that as you go out to
21 lunch. And we'll see you all back here at 1:30.
22 Thank you.
23 (Thereupon, a lunch recess was taken.)
24 CHAIRPERSON NICHOLS: Okay. We're ready to
25 resume, if I can get folks to their seats.
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1 Well, we went out to lunch and the list of
2 speakers expanded. Really delighted that so many people
3 are interested in coming to speak here. And I mean that
4 seriously. But we are going to have an issue about
5 getting people enough time to speak. So one of my
6 colleagues had a really interesting idea, I thought, which
7 is kind of an incentive program. It's like a market-based
8 program. We're not -- we're not going to give you
9 anything, except we're going to give priority to people
10 who are willing to limit their remarks to two minutes or
11 less. So anybody who would like to go to the head of the
12 line and is willing to limit their comments to only two
13 minutes or less, you will automatically get a free pass to
14 come up to the front ahead of everybody else who's
15 waiting. And I'll repeat that as time goes on.
16 Do I have any takers? One already. Very good,
17 sir. Come on forward.
18 MR. MATICH: Well, I think I'm next.
19 CHAIRPERSON NICHOLS: Come on down.
20 MR. MATICH: I'll keep it to two minutes. Give
21 me a 30 minutes heads up that my time's running out.
22 Anyhow, if I might, Madam Chair, your fellow
23 Board members here on CARB staff, let me tell you I thank
24 you for the opportunity to speak to you today. I think I
25 can -- let me introduce myself, if I may. My name is
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1 Steven Matich, and I head up a 90-year-old family
2 construction business based here in California for 90 plus
3 years. And I think I can speak on half of my industry,
4 the construction industry. I'd like to think I can speak
5 on behalf of all business in California. I think we've
6 paid our dues, those dues being called taxes in this great
7 state.
8 With that, let me tell you, Madam Chair, with my
9 involvement and the fact that I have been asked to come
10 and speak today by a number of parties, our current
11 administration, this Board staff, our industry, I feel
12 obligated, particularly when you look at these regulations
13 that are in front of you today. And let me say a couple
14 of things, is that, number one, after I've looked at the
15 regulations and in the last 90 days that I've jumped into
16 it -- and I apologize for being derelict in duty for
17 regulations that have been drafted for three years.
18 'Cause after looking at them, one comment I have to say
19 are to credit staff for what they've done, credit staff
20 for the time they put into it.
21 Some of the language, the industry, I think, can
22 buy. Some of it, I have some heartburn, particularly,
23 real quick, when you talk cash flows, when you talk profit
24 margins. I'm sorry. In my 27 years of business, I don't
25 have a crystal ball to tell me out two, three, five years
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1 and on what my margins are going to be, what my cash
2 flow's gonna be. Because in the market I am in, yes,
3 construction, but in business in general, it's cyclical.
4 And times change, as we see with the housing market.
5 However, that aside, what I'm asking is two
6 things of the Board. When I was here at the workshop,
7 here last Monday, I did plead that -- maybe a
8 request/recommendation to delay the vote. But if it is
9 the consensus of this Board, if I could ask two things.
10 One number, number one most important,
11 communication. Communication with our people,
12 particularly the voters in this state with, not just
13 construction industry but all business, there's a lack of
14 communication on what's happening today. And I admit it
15 was only until the last 90 days that I became aware and
16 alarmed of what was happening. That's my fault. But with
17 the entities that I talked to and other state agencies are
18 in the dark as well on what is happening today with this
19 Board. And I'm talking our Transportation Commission,
20 even the License Board and other entities are asking me,
21 calling me up, what do you take of it? What is your
22 opinion? Would you be willing to express that to the
23 Board? And I wondering, well, we have a lack and a
24 breakdown in communication on what's going on here in this
25 great state.
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1 The other thing I plead and ask is cooperation.
2 You know, we've heard in our health care industry that I'm
3 involved with on the operating boards, on our foundation
4 boards. I contribute to a number of our health care
5 industries. Our hospitals as well. I commend them on the
6 work they do. I do support them, when asked for their
7 understanding, because obviously it's important to all of
8 us, the health care of this great state. It is. Myself,
9 my children and grandchildren, but what I'm asking for is
10 understanding what the industry is trying to tell you
11 today and I think you all understand it. I finally did.
12 It's cooperation. Cooperation with staff on a -- say,
13 that we do go ahead and pass these regulations today.
14 Whatever the consensus of the Board to be, I respect, and
15 I think industry will.
16 But cooperation, and I'll call it, what we have
17 in our industry, a design build. That as we go on with
18 our businesses, large and small, that as we are allowed to
19 help you design these regulations, draft, revise these
20 regulations, as we go in, you know, under the years to
21 come to try to clean up the air here in this state,
22 because that is what has worked with my company and
23 others, particularly in some of our great regional
24 authorities like South Coast, what I've been working with
25 for 27 plus years, since their inception, on equipment.
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1 It's a heck of a lot dirtier than our off-road equipment.
2 But because of the cooperation with South Coast,
3 ourselves, and factory, we made it work.
4 I'll leave it right there. Thank you very much.
5 CHAIRPERSON NICHOLS: Thank you. That was well
6 done. Thank you, Mr. Matich. And I -- those are good
7 sentiments, believe me.
8 Okay. Our next presentation is actually a group
9 of summer interns, and I think they're all going to come
10 forward together. And they've told me that there's nine
11 of them, I believe it is. And they're going to take 15
12 minutes as a group. They are from the Rose Foundation for
13 Communities and the Environment. So I'll give them a
14 minute here to get themselves setup down in front here.
15 All right, ladies.
16 MS. HAMILTON: Good afternoon, Chairman Nichols
17 and members of the Board. Thank you for the opportunity
18 to speak this afternoon. My name is Brittney Hamilton and
19 I'm a junior at McClymonds Excel High School in West
20 Oakland, California. I am working with the Rose
21 foundation for Communities and the Environment. I am
22 joined by other students who are also part of the program
23 and also attend high schools throughout Oakland.
24 We are here today to urge you to pass the
25 off-road vehicle rule and to emphasize the importance of
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1 not postponing the implementation of the emissions
2 regulation. We understand the importance of the
3 construction industry and its concerns about how much it
4 will cost to fix their fleets. But there are other things
5 such as our personal health, the health of all
6 Californians, and the health of our environment that must
7 be prioritized. Today, my peers will explain why we are
8 here and why we cannot wait for this rule to be passed.
9 After a brief review of the negative impact of
10 construction equipments, diesel emissions on citizens
11 statewide, we will tell you about how we experience the
12 impacts of particulate matter pollution in our
13 neighborhoods. We will also tell you a little bit about
14 other sources of air pollution in our neighborhoods to
15 give you more context as you consider cumulative impacts
16 of diesel pollution from construction.
17 Once again, thank you for your time.
18 CHAIRPERSON NICHOLS: Okay.
19 MS. LE: Good morning, Chairman Nichols and
20 members of the Board. Thank you again for the opportunity
21 to be here and speak. My name is Jackie. I'm a junior at
22 Excel McClymonds High School in West Oakland. We have
23 been learning about the health impacts of the particulate
24 matter that goes into the air when diesel fuel is burned
25 we have without the proper filters and technology. We are
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1 all here because off-road vehicles like construction
2 equipment put a lot of diesel particulate matter into the
3 air that we breathe. According to the Union of Concerned
4 Scientists, construction equipment is the second largest
5 source of diesel pollution in California. Accounting for
6 20 percent of particulate matter and 16 percent of
7 nitrogen oxides. For example, the USC found that
8 operating the average excavator in California for one hour
9 produces the particulate emissions equivalent to driving a
10 new big rig more than 1100 hundred miles.
11 My friends is going to explain what those
12 particulates can do to our health. Again, we hope you
13 adopt the strongest rule possible today.
14 Thank you.
15 MS. KAHN: Okay. Good morning, Chairman Nichols
16 and members of the Board. My name is Irfana, and I'm a
17 junior at Oakland Tech High School. As Jackie mentioned,
18 one of the main problems with diesel is the particulate
19 matter that is created when it's burned. We know the
20 health impact of the particulate matter has been brought
21 to your attention before. We think it is important enough
22 to mention again. When the larger particles are released
23 into the air, they can be inhaled and settle in our noses,
24 throats, and lungs. The first particles travel deep into
25 our lungs. Those particles cause inflammation and
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1 scarring of the air passageways and lung tissue causing
2 the amount of oxygen to travel to the rest of the body to
3 decrease. This causes coughing, shortness of breath and
4 can lead to severe or even fatal asthma attacks.
5 Particulate matter also contributes to heart
6 disease, cancer, and other serious respiratory symptoms.
7 It's not just individuals and families with asthma who pay
8 for dirty diesel with their poor health. The state of
9 California is losing money on top of losing clean air and
10 healthy people.
11 According to the Union of Concerned Scientists,
12 construction equipment emissions cause about 30,000 asthma
13 attacks, 180,000 lost work days, 331,040 school absences,
14 and 1,100 premature deaths each year. The cost of the
15 significant health impact is approximately $9 billion
16 annually.
17 Now my friend is going to explain why we think
18 the issue of construction equipment is particularly
19 important for our communities.
20 Thank you for your time.
21 MS. MCGEE: Good afternoon, Chairman Nichols and
22 members of the Board. My name is Christina McGee from
23 Oakland High School. I'm here today to attempt to get
24 this off-road vehicle bill passed. We cannot wait for
25 construction equipment emissions to be regulated because
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1 there are many projects that are happening now and lots
2 more proposed for the near future. So it wouldn't make
3 sense to wait until these construction projects are
4 committed.
5 Today, I would like to describe a few of the many
6 construction projects taking place in our community. And
7 I believe we have a PowerPoint presentation?
8 CHAIRPERSON NICHOLS: Okay. We have printed
9 copies, I believe, that have been distributed, so if you
10 want to go ahead.
11 MS. MCGEE: Oh, okay. But basically there were
12 eight pictures that -- yes, thank you. There are eight
13 pictures about all the construction equipment that went on
14 in our neighborhood and we went onto explore how there
15 was -- there was construction going on in parts of Oakland
16 that were already stressed and were already compact in too
17 much -- there was already too much going on and it was
18 already squeezed in, and certain construction sites were
19 near freeways and already going onto, they were already in
20 places that were already over stressed. And so we just
21 wanted to show how places, in particularly, West Oakland,
22 East Oakland, had a lot of over stressed areas that
23 were --
24 CHAIRPERSON NICHOLS: Yes. You also mentioned
25 there's some text on the back here about problems with
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1 construction equipment.
2 MS. BENDICH: I just wanted to point out because
3 she can't see the pictures, that the first one that says
4 new luxury home construction in West Oakland is a bit,
5 when you look at it, you think, oh, well, that doesn't
6 look so bad. There's a big, you know, bunch of land in
7 front and some buildings in the back. But in reality this
8 is directly in front of Highway 580, 880, where all of
9 that interchange takes place, where we had problem, you
10 know, where the construction had to happen where the guy
11 with the truck. Okay. And they're also homes surrounding
12 that entire area. It's a very congested part of West
13 Oakland, so there's people living there, right up under
14 this new construction, right next to a freeway, and you
15 don't necessarily know that from looking at this.
16 CHAIRPERSON NICHOLS: Right.
17 MS. BENDICH: And the thing that she also wanted
18 to point out as well, is that there's off-road equipment
19 adjacent in West Oakland, in the second picture with
20 the -- I guess it's a bulldozer of some sort, in front a
21 new construction of townhomes. It's about a block from
22 the West Oakland BART station. And, again, it's a very
23 highly populated, very dense neighborhood.
24 And the other pictures also illustrate that, of
25 course, our all-time favorite, is the off-road equipment
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1 that's parked right behind the Oakland YMCA, so as people
2 are inside working out, trying to get healthy, they've got
3 off-road parked directly outside of the gym.
4 And so I will let Christina finish up with the
5 last piece here.
6 CHAIRPERSON NICHOLS: I'm sorry that the
7 technology didn't work for you.
8 MS. MCGEE: It's okay. It's fine.
9 Without pollution control technology,
10 construction equipment creates dangerous working
11 environment for construction workers, as well as harsh
12 breathing environments for surrounding communities. This
13 matters because Oakland is an industrial city that needs
14 construction to grow. For safety of the construction
15 workers and the community, construction equipment needs to
16 be retrofitted or replaced. We shouldn't have to
17 sacrifice our health in order to stay economically strong.
18 So I believe that this off-road vehicle rule should pass.
19 Now my friend Brittney is going to talk about
20 cumulative impact.
21 Thank you for your time.
22 CHAIRPERSON NICHOLS: Thank you.
23 MS. COLLINS: Good morning, Chairman Nichols and
24 members of the Board. My name is Brittney Collins, and
25 I'm a junior at McClymons Excel High School in West
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1 Oakland. I'm here to tell you why I'm in favor of passing
2 the strongest rule possible, off-road vehicle -- sorry --
3 strongest possible off-road vehicle rules. I live in West
4 Oakland --
5 --o0o--
6 MS. COLLINS: -- where there is already so much
7 pollution that the impact of construction equipment on top
8 of everything else is too much to take. When you consider
9 this rule, you need to think about all the other
10 particulate pollution that we face.
11 --o0o--
12 MS. COLLINS: I actually experience the diesel
13 trucks driving through our community every day. There are
14 trucks on the freeways all around us and going in and out
15 of the Port of Oakland, which is the fourth largest port
16 in our country. Also located in West Oakland on 7th
17 Street. There is also industrial pollution in my
18 neighborhood. During the school year, my Environmental
19 Justice class collected particulate matter in pie plates
20 outside of our classroom. We collected metal debris
21 outside a wire rope factory just three blocks from our
22 school. We sent the sample to be tested and the results
23 showed that both in the particulate samples in the metal
24 debris were high in lead and chromium. With all that
25 background pollution, the pollution from the construction
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1 equipment hits us even harder.
2 Please adopt the strongest rule you can today.
3 Thank you.
4 MS. PITTMAN: Good morning, Chairman Nichols and
5 members of the Board. My name is Tiana Pittman. I'm a
6 senior at LaSalle in West Oakland.
7 Since we live in Oakland, I want to tell you
8 about the facts and rates of health problems in Oakland
9 and Alameda County. According to the Alameda County
10 Health Status Report of 2006, the rates of asthma
11 hospitalizations in Alameda County are the second largest
12 among the state's 58 counties. In West Oakland where I
13 live, kids under five years old had to go to the hospital
14 for asthma twice as often as the county average. In 2005,
15 2,299 sixth graders at 14 schools in the Oakland Unified
16 School District were given an asthma questionnaire.
17 Seventeen percent of those student said that they
18 currently had asthma. For all 390 student who reported
19 that they had asthma, a quarter of them needed emergency
20 care. More than half had difficulty sleeping, more than
21 two-thirds had used inhalers, and almost half said they
22 weren't able the do certain activities. All because of
23 their asthma and all in one year.
24 At the middle school on the McClymons campus,
25 over 35 percent of the sixth graders completing the
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1 questionnaire said that they currently had asthma. This
2 was the highest incidence of current asthma of all 14
3 schools. These health impacts explain why we came here to
4 urge to you adopt the strongest off-road vehicle rule you
5 can. Every day that implementation is delayed means more
6 kids in my community will suffer from asthma.
7 Thank you.
8 MS. WILLINGHAM: My name is Danyale Willingham,
9 and I'm a junior at McClymons High School in West Oakland.
10 And I just wanted to give you a feeling for what those
11 asthma rates mean in West Oakland.
12 I have three cousins with asthma. One is 19. He
13 has never played a sports in his life because he was
14 afraid of having an asthma attack. He is getting better,
15 but he's still has all the asthma equipment in his room
16 because he is afraid that one day he might end up having a
17 asthma attack.
18 My other cousin is eight years old. Sometimes
19 she has a hard time catching her breath after she comes
20 outside from playing with other children.
21 My youngest cousin is four years old. She can't
22 really play with other children because she can't keep up
23 with them. They run a lot, so she's not able to run with
24 them without getting out of breath. And I don't think
25 it's fair to make my cousins wait for cleaner air.
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1 Thank you.
2 MS. BISHOP: Good afternoon, Chairman Nichols and
3 members of the Board. My name is Amber Bishop, and I am a
4 sophomore at Skyline High School. I live in East Oakland
5 and I have been diagnosed with asthma since the age of
6 two. The older I get, the more progressively worse my
7 asthma becomes. I am constantly short of breath
8 throughout the day and night. When I become ill, it
9 becomes harder for me to get better.
10 I am one of four people in my household that deal
11 with asthma on a daily basis. Certain smells trigger
12 attacks to come on. Being that I'm surrounded by an
13 industrialized area, the smoke from trucks or smells that
14 come from the factories cause me to use my asthma pump two
15 out of three times in the day.
16 Asthma also interferes with physical activities I
17 take part in. For example, I love to dance. But I'm
18 limited to doing certain things because I can never catch
19 my breath.
20 Please adopt a really important rule today.
21 Thank you again for taking your time.
22 MS. NATHANIEL: Good morning, Chairman Nichols
23 and members of the Board. My name is Ashley Nathaniel,
24 I'm a junior at Excel High School in West Oakland. I
25 would like to thank you for taking the time out to listen
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1 to me and my peers to talk about the off-road vehicle
2 rule.
3 As my fellow classmates stated, the people in our
4 neighborhoods cannot wait for you to regulate the diesel
5 emissions that cause us asthma, heart disease, and other
6 serious respiratory problems to the people in our
7 communities. The construction industry is worried about
8 the cost of cleaning up their vehicles. But we want to
9 remind everyone that we are already paying. We are
10 already paying a high price ever day by suffering with
11 poor health. All Californians are paying the $9 billion
12 burden that the construction equipment places on our
13 economy.
14 We hope you take this in consideration as you
15 make your decision. And please remember, you have our
16 lives in your hands.
17 Thank you once again for your time.
18 CHAIRPERSON NICHOLS: Thank you very much to this
19 group from West Oakland. We appreciate your taking the
20 time and putting together your presentation for us. That
21 was very effectively done.
22 We have a question, I think, though, before you
23 leave.
24 BOARD MEMBER D'ADAMO: Well, it's not a question.
25 Just really want to compliment you. You all did such a
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1 good job speaking. And I actually have two daughters that
2 are in high school, so I appreciate the fact that you took
3 time out and especially this wonderful PowerPoint
4 presentation, Christina. I know we didn't get the benefit
5 of seeing it as you had expected, but we've got copies
6 here, so just want to thank you very much.
7 CHAIRPERSON NICHOLS: Thank you. We all
8 appreciate it.
9 Okay. Next, John McNair, followed by Manny
10 Gonzales, and Joshua Wood.
11 John McNair, are you here? No.
12 Manny Gonzales, are you here?
13 Joshua Wood.
14 MR. WOOD: I'm here.
15 CHAIRPERSON NICHOLS. Good. Okay.
16 MR. WOOD: And actually Manny was from our
17 organization, so I would be willing to also take his time
18 as well.
19 CHAIRPERSON NICHOLS: No. That's okay. But
20 we'll be happy to hear from you. Nice try.
21 MR. WOOD: Okay. My name's Josh Wood. I'm the
22 Governmental Affairs Coordinator for the Sacramento
23 Builder's Exchange. We're a commercial construction
24 association. We have 1500 members in the region. Usually
25 do local government stuff, but today we're here.
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1 While the stuff that you guys are doing today is
2 noble and we definitely think that, you know, things need
3 to be done to clean up the air in California, there are
4 some negative effects that I think we need the talk about.
5 And, first, I don't want to talk about it in a
6 vacuum. First, you guys, this Board, has already passed
7 the portable equipment registration program which will be
8 putting an additional burden on the construction industry.
9 We have a downturn in the market. And these are some of
10 the factors that play into the decision that's being made
11 today.
12 One of the things that troubles us, is there is a
13 significant difference in the cost estimates from your
14 Board, from your staff, and from the construction
15 industry. We're talking the difference between three and,
16 I think, $13 billion. That's a pretty scary disparity.
17 And to be frankly, to be frank, I guess, it's kind of
18 dangerous to make a decision of this magnitude that
19 affects so many people's lives without really having a
20 firm number of what your decision is going to do. And
21 then, especially, you know, in the state, you know. We're
22 talking about a significant amount of money that's going
23 to affect people.
24 And I don't necessarily think that it's safe to
25 make a decision like this without knowing is it three or
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1 13 billion? This is my personal opinion on just judging
2 the Board.
3 If it was the 13 billion mark, if it was, then I
4 think this Board would probably go about the decision
5 they're making a little bit differently. Maybe not
6 changing the regulation, but maybe going with some of
7 CIAQC's proposals as far as, you know, softening up the
8 timeline some to make this all work out, so that people
9 can still come in line with this proposal, but in a time
10 that's more economically feasible for their companies.
11 The problem is the Board doesn't know which one
12 it is. And I don't know if necessarily today is a safe
13 way to go about voting on this. And maybe what needs to
14 really be done, opinion from our association, is to have a
15 third party perspective. Someone to look at the numbers
16 from the construction industry, someone to look at the
17 numbers from your organization, from ARB, and to come up
18 with look at the methodology of the different studies and
19 find out which number is it? Because that's something
20 that plays into this drastically. And to make a decision
21 that affects so many people's lives, that affects so many
22 people's pocketbooks without really knowing how much it is
23 very dangerous.
24 So to sum up, we do support a lot of the
25 proposals that CIAQC has been putting forward. And I'll
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1 let the representatives of CIAQC do a little more speaking
2 on that.
3 But, again, I would really like you to
4 investigate our option, from the Builder's Exchange, which
5 is to have a third party analysis look at the numbers from
6 both sides so that when you vote on this, you know whether
7 it's going to be three billion or $13 billion. Because
8 way too much hangs in the balance.
9 Thank you.
10 CHAIRPERSON NICHOLS: Thank you.
11 We'll next hear from Ed Walker, Bob Roberts, and
12 Diane Bailey.
13 MR. WALKER: I'm Ed Walker of Robinson
14 Enterprises. We work out of Nevada County. But we have
15 an operation in Yuba County. And what I want to talk
16 about is a captive attainment area fleet requirement.
17 The last sentence in that requirement says that
18 your entire fleet has to be operated in that county.
19 We're a small-large, right on the edge is our construction
20 and mining side. We have all this big equipment, it's not
21 easily moved, 50 ton trucks. Large excavators. And for
22 us to be punished because we have operations in other
23 counties, we'd like to see you delete that last sentence.
24 CHAIRPERSON NICHOLS: Thank you. That was crisp
25 and to the point.
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1 Hi, Mr. Roberts.
2 MR. ROBERTS: Hi, Chairman.
3 CHAIRPERSON NICHOLS: Good to see you again.
4 MR. ROBERTS: Welcome back.
5 CHAIRPERSON NICHOLS: Thank you.
6 MR. ROBERTS: Madam Chair, members of the Board,
7 my name is Bob Roberts. I am the Executive Director for
8 the California Sky Industry Association. And I will be
9 brief, but may be not quite as brief, but I will be brief
10 as well.
11 We are a very small industry, and we are so small
12 that we really don't figure out in your inventories. But
13 the ski industry really has concerns because we do operate
14 diesel equipment. Our entire fleet of the 21 resorts in
15 California is about a hundred thousand horsepower, and
16 about 60 to 70 percent of that are snowcats. And this is
17 what we're really concerned with. I think we got last
18 night some of the language. We still need to go through
19 it with our technical people, but it would look like our
20 snowplows have been eliminated from some of the more
21 onerous dimensions of this issue.
22 Our concern is that we have reached a point where
23 we are such a small industry and so focused, we only have
24 two manufacturers who supply snowcats in the world.
25 They're both European, and we work with them fairly
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1 closely. And they have tried equipment. Kasenboro in
2 Germany has actually gone through a testing program
3 they've done in Switzerland as well as in Italy, and they
4 can't make it work. Largely because of altitude. We
5 operate between seven and 11,000 feet.
6 Now, when we went through this with a stationary
7 program, we really didn't have the concerns because our
8 stationary equipment, we were able to work out with the
9 staff. And your staff was terrific, by the way, in the
10 stationary process. All of our generators and the large
11 equipment is encased. The snowcats are a real problem for
12 us because they're out there working at night, difficult
13 visibility, obviously the weather is about as angry at
14 times as it can be anywhere in this whole world that we're
15 talking about right now. We're operating at very high
16 elevations. What we have to do is look at a feasible
17 technological solution. And those aren't on our horizon,
18 yet.
19 So what we're -- what we'd like to see is some
20 kind of breathing room in the next two to three years for
21 us a sit down and work with the V-dex manufacturers. Now,
22 I'm sure there will be a lot of them saying they can do
23 it. We've heard this about our small little industry for
24 a lot of years and a lot of different products, be they
25 either electronics or what have you, and it is such a
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1 strange world that seldom do they work well. And we don't
2 want to find ourselves in the position of buying this
3 equipment, putting it on in the summer, and finding out
4 when we're doing our normal operations or our search and
5 rescue or our avalanche that the stuff doesn't work. So
6 we are concerned about that dimension of it.
7 Now, staff has been working with our consultants
8 and we're comfortable that if we can work within this, I
9 think you have a 15-day period, we'd like be to be able to
10 support this legislation. Right now, we're in a neutral
11 position until we can really see how these dimensions are.
12 But we were early supporters of AB 1493. We were
13 absolutely on board. In fact, the original -- one of the
14 sponsors of AB 32, we are the canary in the 7,000 foot
15 mineshaft. We understand climate change, and we have a
16 commitment to the environment that extends as well to the
17 dimensions of this particular project.
18 So we hope that we'll be able to continue to work
19 with the staff to make sure that our screwy little
20 industry, which is a very, very small part of this
21 incredibly large important problem, can come out of this
22 thing and be a full fledged supporter of this.
23 Thank you.
24 CHAIRPERSON NICHOLS: Thank you. We appreciate
25 your past actions.
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1 BOARD MEMBER RIORDAN: Madam Chairman.
2 CHAIRPERSON NICHOLS: Yes.
3 BOARD MEMBER RIORDAN: If I might, just to staff,
4 would there be the ample, I guess, room to allow for the
5 same consideration when you don't have equipment available
6 for some sort of a retrofit, that you would be given some
7 exemption until that equipment became available to the
8 industry?
9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
10 WHITE: Well, the way the verification program is
11 currently set up, as I was saying earlier, is a two-step
12 process. And the second step is looking to see whether a
13 device will work in a given application, has sufficient
14 temperature and some other considerations. And as
15 we've -- as we've talked through some of this with the
16 industry, we've always felt that that element of it would
17 be that safeguard that I think they're looking for, and
18 that they've got some concerns whether the technology will
19 work for a number of reasons that we just heard. And that
20 the program itself has that built in. So it certainly was
21 never going to require you to force fit a device onto a
22 vehicle for which it won't operate properly.
23 And so I think the safeguards that they're
24 looking for are already there within the existing program.
25 BOARD MEMBER RIORDAN: That's what I was hoping
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1 for, because, obviously, they do have a unique situation.
2 And I think, hopefully, we've covered that for you.
3 MR. ROBERTS: As I say, our technical expert is
4 actually in Europe as we speak, and we only got the
5 documents last night. So we're really not in a position,
6 certainly the layman here is not in a position to pass any
7 kind of technical judgment.
8 CHAIRPERSON NICHOLS: But I think --
9 MR. ROBERTS: We'd just like this 15-day period
10 to focus in on what's really there.
11 BOARD MEMBER RIORDAN: But it appears to me that
12 in general, not from a technical point of view, that
13 you -- probably you nor I really would know, but I think
14 just in a general way, we've got a safeguard built in for
15 you.
16 MR. ROBERTS: We'll work -- well, we hope so. We
17 understand that the God and devils are both in the details
18 and so we're hoping that we're praying to the right God.
19 Thank you.
20 CHAIRPERSON NICHOLS: Thank you.
21 Diane Bailey, followed by Jonathan Lewis and
22 Katie Stevens.
23 MS. BAILEY: Good afternoon, Madam Chair, members
24 of the Board and staff. And thank you for the opportunity
25 to comment. My name is Diane Bailey, and I'm a scientist
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1 with the Natural Resources Defense Council.
2 I'm here today in strong support of the proposed
3 rule before you, and I urge you to adopt this important
4 rule today without further delay and also with some
5 strengthening provisions that were offered to you.
6 Before I comment further, I really want to offer
7 a heartfelt thank you to staff for their very hard work
8 and exceptional dedication on this rule. And I know some
9 of you Board members have been actively engaged on this
10 rule as well as, and I thank you.
11 We want this rule to work for everyone, including
12 Gordon Downs and some of the businesses who may struggle
13 to comply.
14 We are most concerned, however, with those who
15 struggle to breathe or worse. In California, ever year we
16 know that 9,000 people die prematurely from the impacts of
17 air pollution. And while air pollution is never written
18 as the cause on a death certificate, we know that these
19 deaths occur and these people can't be here today to
20 testify and urge your support for a stronger rule.
21 If the industry proposal for triennial compliance
22 is adopted, the 12 percent loss in health benefits that
23 you heard from staff this morning would translate to 480
24 premature deaths extra that could have been avoided. And
25 I want to point out here that we have tried very hard to
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1 talk to industry and explore ways to offer more
2 flexibility. We understand that flexibility is important.
3 However, we haven't really seen any ideas put forward that
4 can make up these lost health benefits that are so
5 important.
6 And I urge you to keep your eye these 480
7 premature deaths that can be avoided and to reject the
8 amendment today to, or the proposal today, to increase
9 flexibility in this rule without further public health
10 protections.
11 This rule is a reasonable, flexible,
12 cost-effective means of getting reductions from a sector
13 that is highly polluting and that is contributing to 4,000
14 premature deaths that can be avoided.
15 Finally, I want to extend support for the SOON
16 program that has been offered to increase the health
17 benefits from this rule. We urge you to accept the SOON
18 program for more health benefits. And we also urge to you
19 open that program up to other area districts. Seyed
20 Sadredin mentioned, the transport issue from the Bay Area
21 and I think that other air districts can also benefits
22 from this program.
23 I hope that you will adopt the strongest, most
24 health protective rule today.
25 Thank you so much.
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1 CHAIRPERSON NICHOLS: Thank you.
2 Okay. Mr. Lewis, followed by Katie Stevens and
3 Lowell Robinson.
4 MR. LEWIS: Good afternoon. My name is Jonathan
5 Lewis, and I work for the Clean Air Task Force. CATF is
6 non-profit environmental organization dedicated to
7 restoring clean air and healthy environments through
8 scientific research, public education, and legal advocacy.
9 We're presently working in partnership with environmental
10 and health advocates in over a dozen eastern and
11 midwestern states to reduce emissions from existing diesel
12 engines, including off-road diesels.
13 As the Board has recognized, exhaust from diesel
14 engines allege causes substantial harm to public health
15 and the environment, including premature death, lung
16 cancer, heart attacks, strokes, and many other heart and
17 lung problems. The reduction of diesel pollution is one
18 of the most pressing public health problems in California
19 and the rest of the United States today.
20 CATF generally supports ARB's proposal
21 regulation. We have submitted two sets of comments for
22 the number of other environmental and public health groups
23 dated May 23rd and July 23rd. Today, I'd like to focus on
24 one of the issues raised in our July 23rd comments. In
25 particular, I want to highlight that the Board's
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1 regulation of off-road diesel emissions is very important,
2 not only in California, but to the rest of the country.
3 Nineteen other states and the District of Columbia contain
4 areas that do not meet even the minimum health standards
5 represented by NAX, for either ozone or PM2.5 or both.
6 For example, 70 million people outside of California live
7 in PM2.5 non-attainment counties. Unfortunately, other
8 states have very limited options to regulate emissions
9 from non-road diesels.
10 Under the current judicial interpretation of the
11 exemption provisions in the Federal Clean Air Act, only
12 California has the legal authority to implement emission
13 standards for existing non-road engines. Other states can
14 implement such standards only by copying the California
15 regulation. Therefore, we urge ARB to do what it can to
16 make its proposed non-road regulation easier for other
17 states to copy without sacrificing California's inherent
18 interest in the process.
19 We believe that there is one simple step ARB can
20 take to make it easier for other states to opt in to ARB'S
21 off-road diesel regulation. We urge ARB to bifurcate the
22 rule as proposed by staff into two distinct rules, one
23 requiring NOx reductions from in-use off-road diesel
24 engines and the other requiring PM reductions. We believe
25 that this is a purely technical administrative exercise
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1 that need not delay the proposal nor should it affect the
2 application or enforcement of the rule as currently
3 proposed. Attachment A to our July 2007 written comments
4 includes our section-by-section suggestion for how this
5 could be achieved.
6 Separating the existing proposals into two
7 separate and distinct rules would allow the states other
8 than California to adopt the rule addressing either NOx or
9 PM without having to address both at once. This would
10 give states needed flexibility to better address their
11 particular health concerns and air quality problems in
12 light of their own circumstances which may well be
13 different from California's.
14 Thank you for the opportunity to testify.
15 CHAIRPERSON SAWYER: Thank you.
16 Ms. Stevens.
17 MS. STEVENS: Hi, thank you. My name is Katie
18 Stevens, and I'm with the California Partnership for the
19 San Joaquin Valley. I'm here on behalf of the convener of
20 the Air Quality Work Group of the California Partnership.
21 His name is Pete Webber, and he had a chance to discuss
22 this with Seyed Sadredin and the district that testified
23 earlier. And he finds that the rule with the enhancements
24 and the incentive funding that were discussed, as proposed
25 by the district, would support the actions of the work
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1 group in reducing harmful NOx emissions in the Valley and
2 improving the health of its residents.
3 I've also submitted a letter that you have in
4 front of you from Mayor Allen Autry from the City of
5 Fresno. In it he writes: The May 24th, 2007 off-road
6 rule proposed by the ARB staff offers an opportunity to
7 accelerate attainment if a proviso is added as proposed by
8 the San Joaquin Valley Air Pollution Control District to
9 enable the San Joaquin Valley, South Coast, and Bay Area
10 Air Districts to opt in to an enhanced program coupled
11 with dedicated incentive funding to obtain additional
12 emissions reductions.
13 That's quick. Thank you for your time. And
14 thanks again for your commitment to accelerate attainment
15 of air quality standards in San Joaquin Valley. And
16 thanks to the matching comments to Ms. D'Adamo.
17 CHAIRPERSON NICHOLS: Thank you.
18 Mr. Robinson, followed by Peter Bruenke, Robert
19 Ikenberry.
20 MR. ROBINSON: Thank you, Madam Chairman and
21 members of the Board. I only have a couple of quick
22 points to bring up.
23 In regard to repower and retrofitting in some air
24 districts, like Feather River Air District hasn't got
25 enough money to do the paperwork, let alone help anybody
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1 put any engines in, the fits that they need to put in
2 these machines.
3 One of the other things is equipment is used very
4 little. We have like a very large grader that's only
5 needed less than one day a week. And there's nobody
6 that's in business in their right mind could retrofit and
7 put an engine in that grader and only use it may be one
8 day a week. It just won't work.
9 So I hope that they'll give us a little bit of
10 more hours for equipment that is not needed and used very
11 little.
12 Thank you.
13 CHAIRPERSON NICHOLS: Thank you.
14 Mr. Bruenke. Ikenberry, and Berlage or Berlage
15 for our next.
16 (Thereupon an overhead presentation was
17 presented as follows.)
18 MR. BRUENKE: Chairman Nichols, members of the
19 Board, my name is Peter Bruenke, I'm the managing director
20 of HUSS in the United States. And we are one of the three
21 manufacturer of a level three V-dex device. And I just
22 want to use my three minutes for giving you a short
23 overview about our company, our products, and about the
24 steps that we've already undertaken here in the California
25 market.
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1 --o0o--
2 MR. BRUENKE: Here you can see our headquarter in
3 Palm Springs. The facility that we use in our warehouse
4 which has the capacity of storage of 500 filter systems at
5 one time in our warehouse which means we're not shipping
6 the products out of Germany. They are available here in
7 California.
8 --o0o--
9 MR. BRUENKE: And the company itself, the German
10 mother company, was found in 1920s, and since the, the mid
11 1980s we are focusing only diesel particulate filters
12 which is our core business, it's not a side business.
13 This is what we do and this is what we can. The history
14 of the American business here, we did a market research
15 for almost two years and after getting the verification in
16 November last year, we founded a legal entity in January,
17 and since April, we own the facility Palm Springs and
18 having the warehouse there, doing the same thing on the
19 East Coast in New York pretty soon.
20 --o0o--
21 MR. BRUENKE: The product itself, we have an
22 installed base of over 20,000 pieces of equipment in
23 Europe and Latin America. And these installed base
24 consist of dual and single systems as well. The current
25 model that we are selling here in the states is seven
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1 years, which is not a new technology, it's not a new
2 product, it's not a better version of something. It has
3 proven its durability a couple of thousand times. And not
4 a single system of our diesel particulate filter has
5 caused any personal injuries or exploding any filter or
6 any engine. And all DPFs that we're selling are reaching
7 already Tier 4 and Tier 5 requirements.
8 --o0o--
9 MR. BRUENKE: As you can see here, this is -- we
10 only verified one product so far with you guys. And we
11 got a complete portfolio and reported, another, three
12 other products in the showcase for getting the
13 verification, so there are more products to come.
14 --o0o--
15 MR. BRUENKE: This is a picture of that was
16 posted on the Board meeting in San Diego, showing one of
17 our installations, and the question was put there, does
18 anyone expect this equipment to survive the rigors of
19 construction applications? Of course not, because it's an
20 unfinished installation. This should be the right
21 picture. This is the finished installation of the same
22 product, almost the same angle, and that actually does
23 survive in the construction equipment.
24 --o0o--
25 MR. BRUENKE: These are examples of recent
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1 installations that we've done here in California. On
2 bigger equipment, which, if you can see, 367 to 450
3 horsepower. They all do the job without having any
4 issues and there's also big Komatsu crane which goes
5 directly after the installation to the World Trade Center
6 site in New York ^ burning up the New Freedom Tower at
7 ground zero.
8 --o0o--
9 MR. BRUENKE: Besides that, this is a screen shot
10 from our website. We already setting up a network of
11 local HUSS authorized installers. Three of them you can
12 see here already on our website have already qualified,
13 two in California, one in the New York area.
14 --o0o--
15 MR. BRUENKE: And there are more come. So we
16 have to, going to have distributors here in California.
17 The warehouse capability, as I said, 500 filters
18 immediately available in delivery time of four weeks. And
19 this is, the delivery capabilities right now, we can
20 provide California with 50 DPFs a month, and about six
21 month, we're going to have 200 per month. And I took over
22 just two months ago in Palm Springs and I hired in the
23 last seven weeks, seven employees. I got six job openings
24 right now and this is the forecast running between 40 and
25 50 employees on the East Coast and on the West Coast as
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1 well as.
2 Thank you very much for your attention.
3 CHAIRPERSON NICHOLS: Thank you.
4 A question here.
5 BOARD MEMBER D'ADAMO: What percentage of the
6 California market do you estimate that you have that your
7 company has currently?
8 MR. BRUENKE: Well, this is just a single math
9 thing. When you're talking about having 180,000 pieces of
10 equipment which are applied for through that law, and the
11 estimation was 90,000 of them is going to be repowered, so
12 90,000 left in a period of 18 years, which means 6,000 a
13 year. And there are three manufacturers out there which
14 comes down to 2,000 per manufacturer which would come up,
15 we're ready for doing 200 a month, would be 2,200 a month
16 and that would work for the market and for us as well.
17 BOARD MEMBER D'ADAMO: And can you just give us a
18 better sense of the technologies that you've employed
19 elsewhere and whether or not they're transferable to the
20 type of equipment that we are considering in this
21 regulation?
22 MR. BRUENKE: Well, one reason why we actually --
23 why I'm standing here today, why we entered the American
24 market, because we have the product that fits perfectly on
25 the low temperature equipment here. The regulation that
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1 you're putting in place here, today, is a regulation which
2 is in place in the European Union since 15 years. That's
3 why we just -- we have the product working since seven
4 years. It was just for us, the challenge is just entering
5 a new market, not coming with a new product. It's just
6 entering a new market.
7 And, also, as the other manufacturers out there,
8 we have also electrical power. We have passive systems as
9 well, but we are coming here with the diesel burner
10 technology because it's independent from the exhaust gas
11 temperature and you don't need to plug it in overnight,
12 which can be very tricky, if you're on a big construction
13 site and you don't have the possibilities to plug in
14 overnight.
15 BOARD MEMBER D'ADAMO: Would you that say the
16 technology is transferable in -- I understand that there
17 are a number of industry representatives that are
18 concerned in particular about the Tier 0 engines and the
19 ability to retrofit because a lot of those engines quite
20 old.
21 MR. BRUENKE: Well, I just could come up with an
22 example that we done just four weeks ago here in the
23 Riverside area. We retrofitted a machine which was very
24 dirty, 40 years old, with one of our systems, and a Tier 0
25 obviously, and it's complying with the law, and, of
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1 course, it's not running for eight hours a day because if
2 you have a diesel particulate filter, it's just a trap,
3 you're trapping real material and if it's full, you have
4 to regenerate it. And this machine is actually at the
5 Port of Los Angeles and it works only two hours a day and
6 it work fine. Complies with the law instead of taking it
7 away and buying new one.
8 BOARD MEMBER D'ADAMO: Okay. And then a question
9 of staff just to get a better idea of what the market is
10 out there for companies such as HUSS. What do you expect,
11 millions of dollars or, you know, that would be available
12 to these types of companies in implementation of this
13 regulation? Just to get a better sense of the incentive
14 that's out there in order to develop products that can be
15 verified?
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: Well, we find that, get you some more specific
18 numbers, certainly, the intent is to move quickly on
19 getting the filters on the vehicles. And so the market
20 will develop very quickly in California for the
21 installation of these. And so, I think, they're going to
22 be very well positioned and certainly at 200 a month,
23 they'll be a, you know, I think they could be a
24 significant supplier, but certainly won't be, there'll be
25 plenty to go around in terms of lots of opportunities for
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1 other companies. And that really kind of gets back into
2 the staff's intent to have a successful showcase where we
3 get multiple manufacturers coming in.
4 And I think, as you saw on that slide, while they
5 have one product verified -- and I don't think they're
6 unique among companies in that regard. There are other
7 products that they use elsewhere that are not quite as
8 traditional. Some use fuel borne catalysts, and other
9 technologies which are also effected. There's some
10 additional hurdles with those that they'll have to go
11 through, through the verification process. But there's
12 certainly lots of opportunities for other technologies
13 like that. We are seeing that in the showcase, as
14 companies bringing forward with us.
15 I think we have a number now, so I --
16 CHAIRPERSON NICHOLS: Stop filibustering.
17 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
18 Yeah. The estimate that we have in the appendix of our
19 technical support document is that there would be about
20 35,000 filters required in the 2010 time frame. And then
21 a smaller number in the subsequent years, as the first
22 year is the highest number necessary. And, of course, if
23 fleets do take advantage of the early retrofit provisions,
24 then it would essentially behalf that number, but earlier.
25 CHAIRPERSON NICHOLS: Yes. There's another
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1 question here.
2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
3 WHITE: Yeah, just looking at this and out of the corner
4 of my eye, I see numbers that we expect at some point in
5 time, they're to -- to be well over a hundred thousand of
6 retrofits of off-road vehicles under this regulation in
7 service in the state. So, obviously, that's with time and
8 that's after several years of implementation. But at its
9 peak, that's what we would estimate would be coming into
10 the state.
11 BOARD MEMBER D'ADAMO: Thank you. The point
12 being made, just plenty of incentive out there to get the
13 job done correctly and get systems that are verified.
14 CHAIRPERSON NICHOLS: Yes. There's something
15 worthwhile for companies to get into.
16 Ms. Riordan, and then Ms. Berg.
17 BOARD MEMBER RIORDAN: Sort of a general question
18 that can be answered in a ballpark. What would your cost
19 be for one of your installations?
20 MR. BRUENKE: Well, in the comparisons with the
21 other competitors, we got four, we got -- from this model,
22 the diesel burner technology, we got 22 different sizes
23 and the sizes depend on age of the model and horsepower
24 rating. So we're starting from 5,500 and going up to
25 40,000. And if you look at the big, the one, the examples
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1 that I mentioned, big scrapers, 633 D, something like
2 that, you end up on the, on the top level between 35 and
3 40,000.
4 BOARD MEMBER RIORDAN: Okay. Would you
5 anticipate as the market grows that, and your production
6 is larger, any economy in numbers?
7 MR. BRUENKE: Sure. Well, that's also simple
8 math, it's just economy of scale. I'll be interested in
9 markets in three months, to be honest here. So if you're
10 coming into numbers selling 200 a month, then there's
11 going to be also some improvement on the pricing, and what
12 we already doing with -- well, requests for big fleets,
13 you also get better prices if you order ten or 50, of
14 course. That's the same like in each business. If you
15 give me a call and request a price, this is a price for a
16 single machine. If you say, we make -- I got just an
17 order in from New York for six Caterpillar 315s. They're
18 coming in. And we do it just on the job, they get a
19 better price, of course.
20 BOARD MEMBER RIORDAN: Okay. Thank you.
21 CHAIRPERSON NICHOLS: Okay, Ms. Berg.
22 BOARD MEMBER BERG: Thank you. I don't want to
23 get lost on the Tier 0 and that particular piece of
24 equipment in the Port of Los Angeles working for two
25 hours. Do you have any data on the crane that's in New
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1 York? Isn't that also an older piece of an equipment?
2 MR. BRUENKE: No, it's a brand-new. It's a brand
3 new.
4 BOARD MEMBER BERG: That's a brand-new piece of
5 equipment?
6 MR. BRUENKE: That's a brand-new.
7 BOARD MEMBER BERG: Has it been your experience
8 on the Tier 0s that there is a significant reduction in
9 running time?
10 MR. BRUENKE: Well, our system, and that's the
11 main advantage of this technology works on any diesel part
12 engine, if it's Tier 0, Tier 1, Tier 2 or Tier 3. The
13 only limitation and that's what you are actually
14 addressing is the running time. If you have a dirty
15 machine, then you could -- well, you can extend the filter
16 medium and come up with a trailer and put some big things
17 on the back, then it would run for eight hours.
18 But if you have a dirty machine, that's not
19 practical, that's not practical, and it's not
20 cost-effective, of course not. If the customer is fine
21 with running twice, I don't know, doing the return twice a
22 day, which means you can run for four or five hours, then
23 you can comply with the law with a Tier 0 machine.
24 BOARD MEMBER BERG: And how long does it have to
25 be down in order to regenerate?
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1 MR. BRUENKE: Half an hour, 35 minutes.
2 BOARD MEMBER BERG: Thirty-five minutes.
3 MR. BRUENKE: Right.
4 BOARD MEMBER BERG: Thank you very much.
5 CHAIRPERSON NICHOLS: Okay. Thanks.
6 MR. BRUENKE: Thank you very much.
7 CHAIRPERSON NICHOLS: Robert Ikenberry, followed
8 by Bob Berlage, followed by Daniel Curtin.
9 MR. IKENBERRY: Thank you, Chairman Nichols and
10 the Board. I'm Robert Ikenberry with California
11 Engineering Contractors. I want to urge you not to adopt
12 the proposed regulation.
13 Among the many problems with this extremely
14 complex regulation, including mandating unavailable
15 technology in some cases, and what we consider to be
16 insurmountable enforcement problems, I just want to talk
17 briefly about the cost.
18 A lot of people have talked about cost. There's
19 been a lot of disparity between the estimates. I don't
20 have a sophisticated evaluation. I just want to add some
21 common sense to the information that's already been
22 provided by your staff, but is not included in their three
23 to 3.4 billion estimate that they used to put a price tag
24 on this.
25 In their evaluation, they already had indicated
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1 that there's about a thousand dollar cost increase for any
2 new home. According to the National Association of
3 Realtors, there's about 5700 new homes sold a month in
4 California as of 2006. That would be, if we average that
5 over a year for the life of this project, a cost
6 originally in their estimate, it was $5 a month, now they
7 $6 a month, of $3.1 billion for those million and 44,000
8 homes over the life of their mortgages. That $3.1 billion
9 is not considered. The staff's original report estimated
10 that there would be a thousand jobs lost on average with a
11 $2.3 billion in lost wages. That is not factored into
12 their evaluation. Now they say 1400 jobs average, 3400
13 jobs at a maximum with using their same numbers, a range
14 of 3.2 to $7.8 billion.
15 In this staff's evaluation, they indicated a
16 total increase in construction costs would be on the order
17 of .3 percent. But when they looked at specific fleets,
18 they found they had to increase their pricing by one
19 percent to make those economically viable. So even if
20 their estimate is only off by a factor of three, that
21 three to $3.4 billion becomes $10 billion.
22 For the type of equipment that our company uses,
23 we looked at replacement costs because repowering and
24 retrofitting is not an option, and we found that the
25 average cost per horsepower was on the order of $1400,
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1 more than ten times the staff's estimate. So if we take
2 $10 billion for the staff's estimate, which I think is
3 very generous, for the cost of construction, three billion
4 to homeowners, three billion to employees, we're talking
5 $16 billion for the total cost to California of this
6 project. It makes our cost benefit ratios against the
7 health savings and the cost per pound look extremely poor.
8 I think that this is too much, too soon, and I
9 urge you to proceed with caution so that we have an
10 effective regulation that will be able to be complied with
11 by the industry and will not cause a burden to California.
12 And these are all numbers that are just coming from your
13 own staff's evaluation, but it seems like somebody's
14 taking a big picture look.
15 Thank you very much.
16 CHAIRPERSON NICHOLS: Thank you. Okay.
17 Now we'll hear from Mr. Berlage, Mr. Curtain, and
18 then Carolina Simunovic.
19 MR. BERLAGE: Madam Chair and members of the
20 Board. My name is Bob Berlage, and I'm here -- that's
21 okay, close enough -- representing Big Creek Lumber
22 Company. We're a small family-owned business on the
23 Central Coast of California. We have a saw mill and five
24 retail outlets and stores that operate in four counties.
25 Four out of six of our facilities are in captive
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1 attainment areas. And we have equipment that's going to
2 be subject to this regulation, if it's passed. We're
3 opposed to this regulation. I'm going to modify my
4 recommendation in case my times runs out, to suggest
5 strongly, based on testimony you've heard today, that you
6 postpone making a decision on this regulation and I'll
7 hopefully have time to explain that.
8 We've calculated the initial phase, and I'm just
9 talking about retrofitting not replacing and retiring
10 equipment and replacing with new equipment. The initial
11 costs are going to be $360,000 for us to comply with the
12 regulations.
13 I'd like to comment briefly on an implicit sense
14 that I picked up on from staff that somehow businesses are
15 going to be able to makeup the difference by charging
16 more, changing a few things. We're in competition with
17 big box stores, but we don't have the luxury, as they do,
18 to average out costs and profit and loss because they're
19 operating in other states. And we have to compete against
20 those companies at an economic disadvantage.
21 One of the things that I'd like to point out,
22 also, was that this regulatory body is not the only
23 regulatory body that we have to deal with. You know, as
24 Madam Chair Nichols knows from resource secretary
25 position, you know, people in our business have a
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1 multitude of agencies and regulations we have to cope
2 with. And I'm going to be brutally honest. California is
3 a hostile environment for small business. It's very
4 difficult for us, and we're barely hanging on. And this
5 proposal isn't going to help.
6 But I'd like to, because I'm afraid I'm running
7 out of time, I want to point out something. I've known a
8 lot of people in my life. I'm getting along in years, and
9 I've met some really good people, some scoundrels, and
10 lots of people in between. And I can tell you after 60
11 seconds, I knew Mr. Downs is an honest man. And I'm also
12 certain that your staff took the information they had and
13 did the very best at presenting truthful information and
14 to give you a quality report. But there's something
15 egregiously wrong if there's that big a disparity between
16 honest people. And as Madam Chair knows, when you're
17 dealing with resource issues and with environmental
18 issues, we always look for the best science. We should be
19 looking for the best economic information.
20 I'd like to reiterate a point that was brought up
21 by a previous speaker and suggest that you do hold on
22 this. Don't move forward. And get something analogous to
23 a best science review to review the economics. Because if
24 your three million versus 12 million, coming from two
25 honest entities, or you're -- you've got an individual
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1 affected business this's saying it's $2 million versus
2 less than $300,000, you've got a serious problem. And I
3 think that that's something that needs to be looked at
4 before you proceed with this. Because if you're going to
5 do this and it's going to affect that many people, you
6 need to make sure you've got the right information that's
7 being interpreted correctly before you move forward.
8 CHAIRPERSON NICHOLS: Thank you for that.
9 MR. BERLAGE: I want to thank you for your time.
10 CHAIRPERSON NICHOLS: You're out of time. But
11 appreciate your comments. They were well heard.
12 Daniel Curtin, Carolina Simunovic, Travis Hagen.
13 MR. CURTIN: Chairman Nichols and members of the
14 Board, my name is Daniel Curtin. I'm the Director of the
15 California Conference of Carpenters. I've also been
16 appointed by the Governor to the Chairmanship of the
17 Industrial Welfare Commission. And I'm a commissioner on
18 the California Commission on Economic Development, which
19 had our first meeting recently.
20 The last time I was in this room, I was up on
21 that podium. And there was a crowd very similar to this,
22 and the testimony was also quite compelling and complex.
23 But I have to tell you, I think you are beginning to --
24 you may be the first place on earth that's really feeling
25 the heat of global warming. Maybe it's all focused on
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1 this meeting today. And so I suggest you're going to have
2 to get used to it because all of the issues that you will
3 be dealing with at CARB are going to be complex trade-off
4 issues.
5 Now, I've been listed -- and I've listed myself
6 here in support of these regulations. And I say that
7 because I believe, like the Governor, that we can grow the
8 economy and have a strong economy, and at the same time,
9 clean the air and, as he's doing, leading the world on
10 global warming.
11 You are really at the point of that conversation.
12 And this is one of the first, and probably most
13 complicated, but they're all going to be tough.
14 I have three or four simple points I want to
15 make. First, I want to do what everybody else has done,
16 is congratulate the Board for taking a longer look at
17 this, the staff for the hard work they've done. But I
18 want to say that the industry, and I've been working in
19 the industry for 25, almost 30 years. That last gentleman
20 is beginning to look young. So I know how things are.
21 But the industry has done marvelous in terms of
22 trying to bring issues to this Board to try to work this
23 issue out. I come to this because I believe in the
24 guidelines or the regulations that you're trying to do. I
25 don't think the industry came at this, as they have over
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1 the years, not just this industry but many others and
2 particularly in the timber area which I also am involved
3 in, where they are trying to fight the regulations. This
4 industry was not trying to fight these regulations. This
5 industry is trying to figure out how to comply with these
6 regulations. That's a significant difference. And there
7 are some vast points of difference, as you've heard
8 repeatedly and will continue to hear.
9 The first thing I want to talk about is the
10 health concerns. They're always there. I have to tell
11 you, construction is one of the most dangerous, unhealthy
12 industries to work in. We are very, very concerned about
13 the health issues regarding the air that the workers
14 breathe on those jobs. Those are our members. It's not
15 like we are unconcerned and dismissing the idea that there
16 may be this many or that many more deaths. They are our
17 members. We want clean air. We want safe jobs. So we
18 are here to help put these regulations together.
19 CHAIRPERSON NICHOLS: Mr. Curtain, you're down to
20 about 30 seconds.
21 MR. CURTAIN: All right.
22 CHAIRPERSON NICHOLS: So give me your points,
23 please.
24 MR. CURTAIN: Well, we're not going to fight
25 that. Okay. Good. Here's the two issues --
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1 CHAIRPERSON NICHOLS: Okay.
2 MR. CURTAIN: -- I really want you to consider.
3 First of all, you'll hear the South Coast and San Joaquin
4 proposals. We would love you to adopt those. We also
5 want you to look at the compliance alternatives, to go
6 from a one-year regulation that has to be met, to a moving
7 target within those three years with some minimum targets.
8 Let the industry figure out how to comply. They're
9 willing to get there. There's a lot at stake. And this
10 is the first chance to sort of find a blended point where
11 everybody can sort of come together. I think this is as
12 close as I've seen it in a long, long time. And you have
13 to have the opportunity to make that decision.
14 Thank you very much.
15 CHAIRPERSON NICHOLS: Thank you for coming and
16 sharing your wisdom with us. We appreciate it.
17 Before I go on actually, I know Carolina
18 Simunovic is next. I know there are people who are
19 beginning to run out of time who have planes, trains,
20 et cetera, that they have to catch. So I'm going to make
21 my offer one more time. If you can promise me that you
22 can stay under two minutes, you can come to the front of
23 the line. And I believe we have one taker for that. And
24 that is Jessica Henn. Jessica Henn? So you'll be next
25 after Ms. Simunovic. Thanks.
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1 Go ahead.
2 MS. SIMUNOVIC: Thank you. Since I also have to
3 be in Parlier by 6:00.
4 Well, thank you very much for the opportunity to
5 address your Board. My name is Carolina Simunovic. And I
6 am the co-chair of the Central Valley Air Quality
7 Coalition. I also work for Fresno Metro Ministry as
8 Environmental Health Director and I'm speaking also on
9 behalf of Latino's United for Clean Air based in Fresno.
10 As I walked in the meeting earlier this morning,
11 I saw a big machine with a sign in front that said: Why
12 is this cleanest engine in this world still not good
13 enough for CARB? And I read it, I looked at it, I took
14 two steps, and then I realized why the answer was very
15 clear. It was parked right in front of the child care
16 center for Cal/EPA and all the children were outside
17 playing and laughing and giggling and going down the
18 slide. And I thought, that's why. And that's why, for
19 me, this engine is not good enough for me or for my
20 daughter, for our children, for California's future, and
21 that's exactly why I think that this rule is so important,
22 and for you to be able to pass a very strong rule that
23 would leave a positive legacy for all of our futures.
24 All of my organizations realize that this will
25 pose an economic difficulty for the, for the businesses
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1 involved. Especially the members of the Latino United for
2 Clean Air, as it is their husbands, their sons, their
3 friends that work in the construction industry that will
4 be affected. But they also realize that it is their loved
5 ones that are bearing the most significant impact of the
6 dirty pollution.
7 I also want to remind the Board -- actually I
8 don't have to remind Supervisor Case or Dee Dee D'Adamo,
9 they are intimately aware of these figures, but just for
10 the rest of the Board. In the San Joaquin Valley, there
11 was a study conducted by Jane Hall from CSU Fullerton that
12 showed a $3.2 billion cost each year for unhealthful area
13 in the San Joaquin Valley. So that figure just about
14 matches the cost for this rule. And that's what Valley
15 residents are paying every year in terms of health tests,
16 lost wages, and just reduced productivity for dirty air.
17 So the economics are spread all around, and we are paying
18 for this dirty air.
19 Without this rule, also, the San Joaquin Valley
20 would not be able to meet the ozone standards by 2024.
21 And that's, that's very important for us because it gets
22 us even farther from reaching the goal that Governor
23 Schwarzenegger, Central Valley Air Quality Coalition, the
24 Air District, and your Board, and all San Joaquin Valley
25 breathers share, which is clean air much before then. So
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1 this rule is critical for that.
2 It's also going to make the difference for our
3 ability to meet the PM2.5 deadline by 2015.
4 We support, along with the Air District including
5 the SOON proposal and recommend allowing the Bay Area and
6 other air districts to participate, as we see that it will
7 benefit all of the California, including the San Joaquin
8 Valley. We also recognize the unique financial situation
9 of the Valley and hope that you find within your budgets
10 the matching dollars that Mr. Sadredin is requesting. And
11 if you need more urging in that, you can look at the audit
12 on the Carl Moyer program and show that our district is
13 doing very well in achieving cost-effective emission
14 reductions. And I think that they will try to please you
15 as much as possible in order to do that.
16 CHAIRPERSON NICHOLS: Your time is up, if you can
17 finish.
18 MS. SIMUNOVIC: Oh, my thing is flashing one
19 minute.
20 CHAIRPERSON NICHOLS: That was a second.
21 MS. SIMUNOVIC: Dang it. Okay.
22 CHAIRPERSON NICHOLS: I'm sorry.
23 MS. SIMUNOVIC: Oh, my goodness. Okay, well, I
24 just want to --
25 CHAIRPERSON NICHOLS: Make a final point if you'd
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1 like to.
2 MS. SIMUNOVIC: -- make a final point --
3 CHAIRPERSON NICHOLS: Yes.
4 MS. SIMUNOVIC: -- that -- please retain the
5 current PM reduction target and look beyond this room when
6 you make your decision today. A very informative survey
7 was released by the Public Policy Institute of California
8 this morning that showed the residents of California want
9 this Board to set air quality policy and about 70 percent
10 of it think that we need to have tougher regulations even
11 though they cost money.
12 So thank you very much.
13 CHAIRPERSON NICHOLS: Thank you. Thanks for
14 taking the time. Okay.
15 We will now hearing Ms. Henn, and then we'll go
16 back to Travis Hagen and Kerry Lawrence.
17 MS. HENN: Thank you, Chairman Nichols and
18 members of the Board. My name is Jessica Henn, and I'm
19 here representing the Regional Asthma Management and
20 Prevention Initiative, RAMP, and the Community Action to
21 Fight Asthma, CAFA, a statewide network of asthma
22 coalitions working to reduce environmental triggers of
23 asthma for school age children.
24 I'm here to ask for your support of the proposed
25 regulation because all Californians deserve to breathe
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1 clean and healthy air. One in six children in California
2 has been diagnosed with asthma, and in some areas of the
3 state, the rates are even higher as the students from
4 Oakland highlighted. Statewide asthma affects nearly 1.4
5 million children and costs $667 million a year in hospital
6 stays. While there is no cure for asthma yet, much is
7 known about what causes or contributes to it. We know
8 that poor outdoor air quality and diesel pollution are
9 likely to contribute to the onset of asthma in otherwise
10 healthy people, making the adoption of the proposed
11 regulation a public health priority.
12 This regulation will make it possible to clean up
13 the second largest source of diesel pollution in the state
14 which is essential given its contributions to asthma.
15 Health savings in the age of 18 to $26 billion far
16 outweigh the cost associated with this regulation.
17 These emissions reductions will lead to the
18 reduction of 100,000 asthma attacks and the prevention of
19 4,000 premature deaths. In order to reduce the
20 detrimental asthma outcomes and protect public health, I
21 urge to you adopt this regulation today. We can't afford
22 the wait any longer.
23 Thank you.
24 CHAIRPERSON NICHOLS: Thank you very much.
25 Okay. Travis Hagen, are you here?
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1 Kerry Lawrence, are you here?
2 Richard McCann.
3 MR. MCCANN: Good afternoon, Madam Chair and
4 Board members. I'm Richard McCann, I'm with M Cubed. I
5 represent CIAQC. And the series of speakers who are going
6 to follow me are also sponsored by CIAQC, concluded with
7 Mike Lewis, who's the executive director of CIAQC.
8 I want to just begin by mentioning I'm going to
9 talk about the cost impacts, the health benefit estimates,
10 and the job loss estimates that the staff has prepared.
11 And first off, the analytic comparison that you have seen
12 on slide 10 is obsolete, because we have updated our cost
13 estimates substantially since that time.
14 The -- what we did is we changed our analysis to
15 rely on the staff analysis in terms of turnover and
16 retrofit rates for the fleet estimates. And we also have
17 extended our cost estimates for out to 2030. What we've
18 done is, in using the staff assumptions, we found that the
19 costs were about 3.9 to $5.1 billion. And actually with
20 our own assumptions, which I'll discuss in a moment, we
21 came up with an estimate of about $12.9 billion over that
22 21-year period. I'm, just for comparison purposes, our
23 original estimate had been out to 2020 and our cost
24 estimate for that period was $9.5 billion. So we have
25 done some revisions to our estimate.
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1 Basically what happens is that the difference
2 between our estimate and the staff's estimate turns on two
3 particular issues. One is how are the incremental
4 additions to the statewide fleet treated, in terms of
5 where do they come from? And the second one is what are
6 the -- what's the underlying base retirement rate within
7 the fleet? And we've actually done some empirical
8 research on both of these topics and have come up with
9 some significantly different conclusions than the staff.
10 The first is that the turnover rate, which
11 actually drives all of this, that's driven by the
12 regulatory process is divided into two components. The
13 first being the turnover -- a churning component, which is
14 the transactions between fleets, between firm fleets, of
15 used vehicles in order to comply with the rule. For
16 example, that one fleet retires its Tier 0 piece of
17 equipment and goes out and buys a Tier 2 piece of
18 equipment from another fleet. We've actually ignored
19 those costs in our cost analysis. We basically said all
20 of that churning is basically zero, has a zero cost. And
21 we're being conservative in that because there is, in
22 fact, a cost associated with that.
23 There is a second component, though, which is the
24 incremental additions of new technology to the fleet that
25 are necessary in order to comply with the regulation.
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1 That is, the Tier 3 and Tier 4 engines that need to come
2 into the fleet in order to improve, accelerate the
3 improvement of the overall fleet emission rate. And
4 that's the component that we focused on, which is the
5 small portion, the incremental rate. The staff has
6 estimated that that incremental turn over rate is about
7 3.4 percent per year, in addition to the current turnover
8 rate of 6.2 percent, over the period of 2010 to 2012, and
9 three percent over the period 2013 to 2020. So they're
10 basically saying that the incremental retirement rate is
11 accelerated by over 50 percent, according to the rule.
12 CHAIRPERSON NICHOLS: Mr. McCann, you've actually
13 used three minutes, but you've also revealed an
14 interesting fact to me which I had not previously known,
15 which is that you're part of a group that has eight people
16 who are planning to speak. If you each had three minutes,
17 that would give you 24 minutes for your entire group. Now
18 you can divide that time up any way you want to. But
19 something is going to have to give here. We're not going
20 to, you know, extend your time and then extend the next
21 person's time and the next person's time. So if you have
22 an organized presentation and you'd like to explain how
23 you're going to do it, that would be fine. But I'm going
24 to give your group until 3:15 to do it all, including
25 Mr. Lewis. So how do you guys want to do it?
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1 MR. MCCANN: No, Mr. Lewis is here. He's
2 organizing this.
3 CHAIRPERSON NICHOLS: Mr. Lewis isn't here yet.
4 MR. MCCANN: I can wrap this up fairly quickly.
5 CHAIRPERSON NICHOLS: Okay, but you're -- we'll
6 take it out of somebody else's time.
7 MR. MCCANN: Okay. Appreciate that.
8 CHAIRPERSON NICHOLS: All right. Thank you.
9 MR. MCCANN: Also, the second -- and so basically
10 what we did is we looked at the question of, these
11 vehicles have to come in as Tier 3 and Tier 4. And the
12 additional factor that we looked at is what are the prices
13 of new vehicles that would have to come apply with Tier 3
14 and Tier 4? We got dealer quotes for, from three fleet
15 owners of several hundred vehicles, and we estimated that
16 the new vehicle prices are about 60 percent higher than
17 what the staff had used. The staff had done their
18 estimate from a survey of used vehicles. They did not
19 survey new vehicles in doing their cost estimates.
20 Second component that is important is looking at
21 the turnover rate. What we did is we got sales data from
22 the Engine Manufacturer's Association. There's about 8500
23 vehicles sold in California over the '98 to 2006 period.
24 In order to -- the turnover rate in the fleet that would
25 match that amount of sales is 3.7 percent per year versus
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1 the staff has an assumptions of 6.2 percent in their
2 model. These two components which are empirically
3 derived, are the explanation for the large difference
4 between the staff estimate and our estimate. So you
5 basically have to decide as to whether you are going to
6 rely on the empirical estimates for these particular key
7 components are not.
8 The second thing, just quickly, on the health
9 benefits, is that I've submitted comments on reviewing the
10 health benefit estimates. Fundamentally, there was a
11 review, panel review by nine experts of the Pope and
12 Dockery study in 2006, that was the basis for much of the
13 analysis done by the staff. Those experts were unanimous
14 in saying that there was no way to quantify the emission
15 reductions benefits, that there is, there is evidence that
16 PM emissions do cause increased mortality and morbidity,
17 but there's no ability to put numbers on it. So that any
18 estimates that you see are, in fact, not supportable by
19 any of the science at this present moment.
20 And then just, finally, a quick point on the job
21 impacts estimate. The staff estimate is basically
22 assuming that the industry can pass through 90 percent of
23 the costs to customers. In fact, U.S. EPA and other
24 sources estimate only about 50 percent can be passed
25 through. That would mean that the job impacts would be
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1 about 7,000 rather than 1400.
2 Thank you.
3 CHAIRPERSON NICHOLS: Okay. Thank you. And
4 stick around. We may have questions.
5 Mr. Rohman, followed by McCort and Williams.
6 MR. ROHMAN: You know the paper that I had to
7 write to -- I had to redo it. So I had to bring my
8 computer up here, but that's okay.
9 First of all, my name is Gary Rohman. I'm
10 vice-president of Echo Equipment Corporation, a heavy
11 equipment rental company that's been in business since
12 1962.
13 I've been working on this regulation for three
14 years. I've worked with Kitty Howard. I worked with
15 Annette Abair. And I've been working with Erik White, so
16 I understand it. I've been around. And, quite frankly,
17 I've spent countless hours working on this rule and
18 sincerely hope that my input was useful and it didn't go
19 on deaf ears.
20 Early this year, the San Joaquin Valley Air
21 Pollution Control District voted nine to two to extend the
22 federal attainment date from 2013 to 2024. I might add
23 this action was supported by CARB. One Board member was
24 quoted as saying that: Engine technology does not
25 currently exist to meet the strict emission standards.
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1 They further stated that they were not going to sacrifice
2 businesses by requiring equipment owners to meet an
3 emissions standard that is currently unachievable with
4 current technology.
5 I admire the courage of this Board to take this
6 stand and to acknowledge that the construction -- what the
7 Construction Industry Air Quality Coalition, which is
8 CIAQC, has been trying to articulate it to staff.
9 All of the equipment owners sitting in this room
10 today really should not be here. This meeting, in my
11 opinion, is completely wrong. What should be taking place
12 is a meeting of every equipment manufacturer, emission
13 control system manufacturer, and even the individual
14 that's working in his garage to try to find answers to
15 California's diesel emission problem.
16 CARB should be encouraging the development of
17 these control systems that will help equipment owners
18 clean up construction equipment. Instead, CARB is putting
19 the caboose in front of the engine and placing the
20 emissions enhancements on the backs of the end users. The
21 equipment owners, us, we do not have the technical
22 experience to find the answers to emissions -- engine
23 emissions, but the manufacturers do. The way that this
24 rule is currently being presented, it will only result in
25 derailment after derailment.
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1 As we begin to climb the grade of this
2 regulation, we need to know -- we need you to know, the
3 Board -- excuse me -- we need you, the Board, to place the
4 engine back in front of the caboose. If the San Joaquin
5 Valley, an air district with some of the worst air quality
6 in the nation, can acknowledge that technology does not
7 exist to give equipment owners the tools to meet
8 quantifiable emission reductions, we would ask this Board
9 to grant our industry additional time.
10 This not only will give us time for Tier 4 engine
11 solutions to enter the marketplace, it will allow each
12 company to use their own business plan to find
13 cost-effective solutions.
14 And I just want to put one other thing in. This
15 afternoon, Seyed, the executive director of the San
16 Joaquin District, asked for a $5 million funding. I live
17 in that area. I know what the difficult challenges that
18 we have to meet there. And I want to support that. And
19 if we could, I'd like to double it to $10 million.
20 That's all I have. Thank you.
21 CHAIRPERSON NICHOLS: Okay. Thank you.
22 The rest of this group. Mr. McCort,
23 Mr. Williams, Mr. Fauchier, Mr. Davis, Malloy, Lewis, come
24 on down, please.
25 (Thereupon an overhead presentation was
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1 presented as follows.)
2 MR. WILLIAMS: My name is John Williams. I'm
3 with Williams Pipeline Contractors, and I had a little
4 PowerPoint in there.
5 --o0o--
6 MR. WILLIAMS: If implemented, the proposed
7 regulations would have a profoundly negative impact on our
8 ability to stay in business.
9 --o0o--
10 MR. WILLIAMS: We're a small family-owned
11 underground construction firm specializing in public works
12 infrastructure rehabilitation. We replace old and
13 outdated sewer and water pipelines, primarily in the
14 Los Angeles basins.
15 --o0o--
16 MR. WILLIAMS: Our primary customers are the city
17 of Los Angeles, municipalities in Los Angeles, Orange, and
18 Ventura Counties and various municipal water and sewer
19 districts.
20 --o0o--
21 MR. WILLIAMS: This is the kind of work we do,
22 replacing broken sewers that are bleeding sewer water into
23 the environment.
24 --o0o--
25 MR. WILLIAMS: We operate with five crews
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1 consisting of five to seven men.
2 --o0o--
3 MR. WILLIAMS: This -- we're replacing a water
4 main here.
5 --o0o--
6 MR. WILLIAMS: Our equipment is late model and
7 well maintained with Tier 2 engines.
8 --o0o--
9 MR. WILLIAMS: Our equipment; we have ten
10 backhoes, a small loader, an asphalt grinder, and two
11 three to five ton rollers, and we have some other
12 equipment that was a little bit more detailed than I
13 wanted to list here.
14 --o0o--
15 MR. WILLIAMS: Picture of our crews working on a
16 sewer line.
17 --o0o--
18 MR. WILLIAMS: And these backhoes are two years
19 old.
20 --o0o--
21 MR. WILLIAMS: Our approximate current value is
22 500,000. We think after the regulation that it will be
23 essentially valueless. The replacement value in our
24 normal time frame would be $1.2 million.
25 --o0o--
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1 MR. WILLIAMS: We think we'll have to do this
2 twice. If the regulation was voted into effect, all our
3 equipment will have to be replaced twice within 12 years.
4 One would be normal and one time would be driven by these
5 regulations. Aftermarket devices we've determined on our
6 stuff is impractical.
7 --o0o--
8 MR. WILLIAMS: We have a 50 percent chance of
9 survival. If we survive, downsizing is inevitable.
10 Several of our crew and office staff will be unemployed.
11 Infrastructure rehabilitation will be severely retarded.
12 We'll have to charge more money for our work.
13 --o0o--
14 MR. WILLIAMS: A solution. Extend the
15 implementation by five years. Replacement of equipment
16 would be accelerated but manageable. Additional time
17 would allow for the development of practical and safe
18 aftermarket devices.
19 --o0o--
20 MR. WILLIAMS: Williams Pipeline Contractors
21 agrees with the goals of the proposed regulation, but we
22 need to be able to afford it.
23 Thank you for your time.
24 CHAIRPERSON NICHOLS: Thank you very much.
25 BOARD MEMBER RIORDAN: Madam Chair, just one
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1 question. What's your horsepower? What's your total
2 horsepower?
3 MR. WILLIAMS: We're around 1400 horsepower,
4 probably we're going, small going to medium. On your time
5 frame 1400 to 1600. We're going to buy some more
6 equipment soon.
7 BOARD MEMBER RIORDAN: Okay. But doesn't that
8 help you tremendously? I mean, I'm looking down at the
9 staff, just -- wouldn't that help him tremendously, being
10 a small --
11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
12 WHITE: Well, I think he's got two things in his favor
13 here. First is, you know, if the Board decides that 2500
14 is an appropriate level for small fleets, even with his
15 growth, he would still be a small fleet. And the second
16 piece is what we are looking at is if he's, in fact, all
17 Tier 2, and a level, the PM emissions that come out of
18 those engines in the regulation, he is probably not even
19 have to put filters on, even consider them until the 2018
20 time frame. So we're talking, you know, ten, 11 years
21 from now that this impact of this would be. And if he is
22 small, there is no turnover element to his fleet.
23 BOARD MEMBER RIORDAN: Thank you.
24 CHAIRPERSON NICHOLS: Thank you. That's helpful.
25 Okay. Is Dan Fauchier -- I'm sorry if I'm
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1 butchering your name.
2 MR. FAUCHIER: One of those was right.
3 CHAIRPERSON NICHOLS: Fauchier, good. William
4 Davis and Scott Malloy are coming after you.
5 MR. FAUCHIER: I represent the Engineering and
6 General Contractors Association of San Diego. And this is
7 an interesting problem for the Board. Because you're
8 really going to need the wisdom of Solomon.
9 The staff are proposing a certificate of
10 compliance be issued each year to assure that companies
11 meet the enforcement targets. And that certificate of
12 compliance becomes an enforcement tool so that public
13 agencies won't let people bid or perform work if they
14 haven't been able to produce that. And if it's sewn into
15 CEQA, then developers won't allow them on the property
16 because they haven't met the targets.
17 That's fine in normal business cycle. But every
18 now and then is a dip year, like this one is, where
19 revenues are off about 40 percent. Contractors survive a
20 dip like that by pulling in their horns, spending no extra
21 money, and in a year like that, without the ability to add
22 additional bank financing, which they won't have, and
23 they'll have no profits, they won't be able to meet the
24 enforcement targets in one year and, therefore, they won't
25 get the certificate of compliance and, therefore, they
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1 will have zero revenues in the next year because they
2 won't be able to bid or perform any work. So this
3 combination of a one-year fleet average and a certificate
4 of compliance is a torpedo under the water until we hit a
5 bad year, and then you're going to take down dozens,
6 hundreds, thousands of medium-sized businesses. We really
7 need the three-year fleet average.
8 Thank you.
9 CHAIRPERSON NICHOLS: Thank you.
10 BOARD MEMBER BERG: Madam Chairman?
11 CHAIRPERSON NICHOLS: Yes.
12 BOARD MEMBER BERG: My understanding on that
13 certificate is that is a certificates of reporting
14 compliance. In other words, they submitted their report.
15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
16 WHITE: It would be that they submitted their report and
17 that that report said they met whatever the requirement
18 was for that year.
19 BOARD MEMBER BERG: Okay. Thank you.
20 CHAIRPERSON NICHOLS: All right. Do we have
21 Mr. Davis or Mr. Malloy? And then Mike Lewis is going to
22 finish up here, if he's here.
23 MR. DAVIS: Good afternoon, Mrs. Nichols. My
24 name is Bill Davis. I'm the Executive Director of the
25 Southern California Contractors Association. And I heard
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1 what you were saying about our time limit, so I'm going to
2 eliminate everything that I was going to say except for
3 three things.
4 Welcome. We're glad you're here.
5 Second thing, we hope Dr. Wong is recovering and
6 doing very well.
7 Third thing is our association has already begun
8 the process of implementing whatever your rules become.
9 We're in contact with the ever charming Mr. White, and his
10 boss, equally charming Mr. Cross, and they have agreed to
11 already come and speak to our members and get involved in
12 the process of explaining what this rule is. But the
13 problem is our association only represents 350 out of the
14 234,000 contractors in California. We asked your
15 predecessor and we ask you, please invite us into the
16 implementation process. We can help.
17 Thank you.
18 CHAIRPERSON NICHOLS: You can. Thank you.
19 MR. DAVIS: And I cede the rest of my time
20 upstairs.
21 MR. MALLOY: Good afternoon, my name is Scott
22 Malloy. I'm with the Building Industry Association of San
23 Diego County. I want to thank very much today for having
24 this hearing, and I want to thank you again for your
25 thoughtful consideration of all the comments that have
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1 been raised by the construction industry today.
2 We support our partners in the construction
3 industry and we strongly support the proposal by CIAQC,
4 specifically extending the horizon to a three-year period
5 versus a one-year.
6 We are very concerned about the cost of staff's
7 proposed regulations. Based on the numbers I've heard
8 today from the example that staff gave earlier of about
9 112 -- fleet of 112 pieces of equipment, staff's estimate
10 was $300,000 on average per year. There's 180,000 pieces
11 of equipment out there. If you project that out, that's
12 $.6 billion per year. And that fleet was ostensibly a
13 pretty standard fleet. Pretty representative of the
14 overall condition of our fleet today. $.6 billion per
15 year times 20 years amounts to $12 billion. So based on
16 staff's specific analysis of a fleet, we have an impact of
17 $12 billion. Which, not surprisingly, is pretty close to
18 the impact that we're estimating. And that's just the
19 direct impact. So hopefully we can get a little
20 clarification on that.
21 The indirect impacts, the cost of these
22 regulations will increase the cost of constructing
23 housing, office space, and retail space. It will have a
24 major impact on development impact fees. Development
25 impact fees for everything from schools, parks, roads,
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1 public facilities, sewer and water, everything that is
2 infrastructure related will go up, which will also be
3 reflected in cost of building homes, offices, and retail.
4 We are very concerned about this given the state
5 of affordable housing in this state. We're also very
6 concerned about these cost increases due to the fact that
7 our climate is not particularly considered business
8 friendly at this point. It's very difficult to be a
9 successful business in this state. And we do wonder, you
10 know, at what point the state will come to a realization
11 of perhaps we've gone too far with some of these
12 environmental regulations when we lose Sisco Systems or
13 Qualcom or another major employer, when they say we can't
14 afford to hire people here, we can't afford to expand our
15 business here, we're going to have to go somewhere else.
16 Will we then realize that perhaps some of the impacts of
17 these regulations had negative social and environment and
18 economic impacts.
19 And we're also very concerned about that issue as
20 well, the loss of jobs, the lack of analysis of the
21 indirect cost effects of this, the lack of analysis of the
22 potential loss of other environmental solutions which no
23 can't be implemented because we're raising the cost of
24 housing. We're raising the cost of building roads. We're
25 not going to be able to achieve as much congestion relief.
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1 What are the environmental impacts of that? If my house
2 costs more, that prevents me from being able to
3 potentially put solar panels on my roof. It precludes me
4 from maybe buying a car that's less -- that is more fueled
5 efficient. What are the environmental effects of all
6 that? The ripple effect as this goes out into the
7 economy.
8 So those are the kinds of things that really need
9 to be analyzed very carefully when you're considering a
10 regulation of this size and scope. We believe the CIAQC
11 has come up with a very reasonable proposal. It was said
12 earlier that this is probably one of the first times
13 you've an industry here saying we support this. Just give
14 us a more flexibility way to achieve it. And, again, in
15 consideration of that, you'll have plenty of time to
16 reconsider this. This is a 20-year implementation phase
17 in. You don't have to do everything today. You can --
18 you'll have the ability to fine tune this regulation as
19 time goes on. If in 2012 or 2015, you realize you're not
20 starting to see the reductions in emissions associated
21 with these regulations, you can refine the rule and
22 tighten them up. Look at new technologies. Find a better
23 way to get to the end goal, which we're all saying we want
24 to achieve. We just don't want to break the backs of this
25 industry in the process.
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1 Thank you very much.
2 CHAIRPERSON NICHOLS: Thank you. Okay. Next.
3 MR. WHELAN: Madam Chairman, members of the
4 Board, my name is Mike Whalen with Ferma Corporation, a
5 general engineering contractor in Mountain View,
6 California.
7 CHAIRPERSON NICHOLS: Excuse me, Mr. Whalen,
8 you're not part of this group, or you're not in the list
9 that I've got anyway.
10 MR. WHELAN: I'm sorry, I thought I heard you
11 call Mike Whelan.
12 CHAIRPERSON NICHOLS: No, I apologize. I said
13 Michael Lewis.
14 MR. WHELAN: I'm sorry.
15 CHAIRPERSON NICHOLS: That's okay. Is Mike Lewis
16 here? Well, we'll get to you soon. You're not far away.
17 MR. LEWIS: Good afternoon, ladies and gentlemen.
18 I'm Mike Lewis, I'm here today on behalf of the Coalition
19 to Build a Cleaner California, which is the construction
20 industry group that's come together to deal with this
21 regulation.
22 I think what you've probably heard from us is
23 we're not against a regulation. We want a regulation that
24 works. We think that the proposal that we've crafted with
25 the air districts is one that gets there. We recognize
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1 that a proposal in order to work has to accommodate both
2 the needs of the Air Resources Board, the construction
3 industry, and the air district, and I appreciate the
4 effort of the CARB staff to give it a name, so soon after
5 we submitted it and call it "SOON." I like the analogy,
6 if you will.
7 We think it's a beneficial program for a number
8 of reasons. First of all, it gives the contractors an
9 opportunity to have more flexibility and how they manage
10 their fleets. That's why we propose the three-year
11 milestone measures.
12 Most of these contractors have business plans.
13 We know that there are going to be tier, new tier engines
14 coming in at a certain time. We've timed those increment
15 to match those so that they have an additional tool in
16 their toolbox, if you will, to meet the standards, which
17 is to buy new equipment that actually meets the standards,
18 rather than having to repower or retrofit something that
19 they're going to have to change later on.
20 I want to make it clear that from our standpoint
21 you can't uncouple the three year milestones from the SOON
22 program because it's that SOON, it's that three-year
23 milestone that gives these larger contractors who are
24 going to be impacted by this, the ability to manipulate
25 their fleets in order to participate in the SOON program.
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1 And participation in the SOON program isn't free. They're
2 going to have the match the cost of those engines and
3 they're going to have to pay a hundred percent of the cost
4 of those particulate traps. So, this isn't something that
5 is free to the contractors. It's going cost them more to
6 do it. It has some advantages in that later on when those
7 equipment comes back in the fleet, they'll be able to take
8 credit for it. But they're going to have to do earlier
9 compliance than they normally would.
10 The SOON program is going to start before your
11 starting times. So we're on the hook, but this is an
12 enormously creative and innovative and entrepreneurial
13 industry and we think that given the flexibility, no two
14 contractors are going to approach it the same way. But we
15 think that given the flexibility they can get to those
16 goals and still achieve what it is the air districts want
17 to do, but it's important that we tie together the two,
18 the three year fleet averages with the SOON program.
19 And we're also insisting that that be statewide
20 for all contractors because, in effect, what happens is
21 the big contractors, by their ability to access these
22 funds and do this over compliance, are helping the small
23 contractors who frankly can't comply or can't qualify for
24 Carl Moyer funds simply because in many cases they don't
25 operate their equipment enough hours. They can't qualify
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1 for the funds.
2 We are in the process of working with the
3 Legislature to get without the limitations, frankly, of
4 Carl Moyer so that they can qualify. We think that's
5 going to happen. We think it's going to allow them to
6 start compliance much earlier than the dates that are
7 established in your program. But obviously, there's a
8 leap of faith on our part that you're going to have these
9 V-dex in place and on time for us to do this. We are
10 hoping for a little leap of faith on your part that we're
11 going to be able to deliver on what we say we can, if you
12 can deliver on what you say you can.
13 I think on the whole you're going to see a much
14 more significant reduction in emissions statewide as a
15 consequence of the SOON program. We know that there are
16 other districts that are interested in opting in. I'm not
17 going to reserve comment on that at this point. This was
18 designed to help two districts who desperately need
19 additional reductions in order to meet a very critical
20 deadline for ozone, and we want to help them. If there's
21 a way other districts feel they can work with local
22 contractors and opt in, it may be beneficial. But it
23 starts to change the complexion of the whole program if
24 everybody in the state starts opting in to it. So I'm
25 cautious about what impact that's going to have on the
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1 industry.
2 We said -- as we said, I think the net result is
3 a significant early reduction, much more flexibility for
4 an industry that, that can, given a little bit of time in
5 managing their fleets, can make better decisions than your
6 annual fleet averages can in terms of how and what they
7 retrofit, what they repower, what they replace, and what
8 they retire, which are their four options, and give them
9 the chance to figure that out in three year windows
10 matching their business plan and you're going to get a far
11 better result, I believe, than with the annual sort of
12 forced decision-making that you're imposing on them with
13 your, with your annual fleet averages.
14 CHAIRPERSON NICHOLS: Mr. Lewis -- oh, okay.
15 You're done. Sorry.
16 MR. LEWIS: I thank you for your consideration.
17 CHAIRPERSON NICHOLS: You were winding up just as
18 I was telling you to. Very good. Good timing.
19 BOARD MEMBER BERG: Madam Chairman.
20 CHAIRPERSON NICHOLS: Yes.
21 BOARD MEMBER BERG: Madam Chairman, I have a
22 question. Mr. Lewis?
23 CHAIRPERSON NICHOLS: Yes. Please stay. You've
24 got a question.
25 BOARD MEMBER BERG: On the three-year window, was
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1 it within the plan that the companies would continue to do
2 annual reporting.
3 MR. LEWIS: Yes. The annual reporting would
4 remain in place, yes.
5 BOARD MEMBER BERG: And are you suggesting that
6 the 20,000 horsepower, which would -- was the minimum
7 horsepower, as I understood it, for the SOON program, that
8 you would lower that to include people under 20,000
9 horsepower.
10 MR. LEWIS: No. I think the idea was to keep the
11 20,000 horsepower in place to sort of minimize the number
12 of contractors who are going to have to be under the
13 mandate, if you will, and allow both the districts, the
14 districts some limited group of folks that they were going
15 to have to deal with to make their funding determinations.
16 BOARD MEMBER BERG: And so your comment on the
17 upcoming potential legislation was to fill the gap for
18 small and the medium companies that might not qualify for
19 Carl Moyer because --
20 MR. LEWIS: Right.
21 BOARD MEMBER BERG: -- of equipment time or
22 productivity --
23 MR. LEWIS: Right.
24 BOARD MEMBER BERG: -- that would kind of fill
25 in.
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1 MR. LEWIS: Yeah. That's kind of, it's a little
2 bit of a separate issue but it all fits together. I -- I
3 was only illustrating the fact that I think you're going
4 to see fleets start to comply much earlier than the
5 schedule calls for if funding becomes available. We saw
6 it with the large fleets. They've been -- they've been
7 using Carl Moyer funds since 2000. Very early compliance
8 because the money was there. The small and the mediums
9 simply can't qualify so they're doing little or nothing
10 and they're stuck, and they're going to -- they're facing
11 later start times, but they really don't have any options
12 right now to be able to access the funding to get them
13 started on that path.
14 BOARD MEMBER BERG: And, finally, does CIAQC
15 agree to the 40 percent at the end of the second year as
16 kind of a benchmark as to that we'll agree that we'll have
17 some sort of percentage along the way.
18 MR. LEWIS: We recognize that there has to be
19 some demonstration of reasonable further progress, if I
20 can use that term, that you don't want a contractor
21 necessarily doing nothing in one year, although under the
22 current, the current annual increments, the PM emission
23 averages only change ever other year. So if you hit it
24 one year, you don't have to do anything the second year.
25 So what we said is take the delta between the two
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1 milestones of 2011 and 2014 and you have to achieve 40
2 percent of it within the first two years. So that you
3 have to do something, and you have to have, obviously hit
4 the balance by the third year. But that assures you that
5 everybody's doing something in that window.
6 We also would suggest to the staff that you --
7 because the starting times for the fleets are staggered
8 with the large and ten, the medium and 13, and the small
9 and 15, if you keep the staggered starting times and you
10 keep the three years staggered, you'll have one or the --
11 one of the fleets in a hundred percent compliance every
12 year, if you stagger the start time. So that will
13 guarantee that progress and emissions are being reduced
14 every single year, rather than putting them all on the
15 same three year cycle. So it will assure you that, that
16 reductions are being made every single year. We think
17 that makes sense.
18 BOARD MEMBER BERG: Okay. Thank you.
19 CHAIRPERSON NICHOLS: Yes. Mr. Loveridge.
20 BOARD MEMBER LOVERIDGE: Let me ask maybe the
21 obvious question. When you talk about annual, when you
22 talk about three years, what if it was two years?
23 MR. LEWIS: Well, I don't think that two years
24 gives the contractors any real flexibility. I mean, we're
25 talking about the particulate increments now. Basically,
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1 it's -- if you can hit the fleet average, you don't have
2 to do anything the next year, anyway. You have a two-year
3 program in effect.
4 Now, the question is how many people are going to
5 be able to hit it and get the free year? I don't know and
6 I'm not sure the staff knows. We think that, you know,
7 from a business planning standpoint -- and these are not,
8 these are not small decisions. It's not like running out
9 and buying an automobile. I could do that this afternoon.
10 Or getting my muffler installed, I can do that in an hour
11 at a muffler shop. These are substantial financial
12 decisions. They're usually made well in advance. They
13 decide several years in advance what they're going to
14 alter, what they're going to replace, what they're going
15 to repower. And we think, you got to keep them on the
16 same cycle. You can't -- it's not going to make sense.
17 It's going -- it's going to require much more complicated
18 reporting if you're reporting on one cycle NOx and another
19 cycle PM. We think to keep everything on the same cycle
20 and keep it all on a -- on a reasonable period of time
21 with demonstrations of progress each year that will work
22 most effectively for the largest number of contractors.
23 CHAIRPERSON NICHOLS: Thank you. I just want to
24 say, I don't usually commend groups for their testimony,
25 but I do want to say that I appreciate the fact that your
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1 organization has really come together and made a lot of
2 constructive suggestions and had a very positive impact on
3 the development of the rule so far. We're listening.
4 We're thinking. And we may be able to do something along
5 the lines of what you're suggesting. I can't say that at
6 this point.
7 But I feel that, in general, our concern is, as
8 you've correctly identified, that we need to see the
9 progress and we need to start seeing benefits soon and not
10 stretch this program out. And I do appreciate the fact
11 that the industry has at least come together to
12 acknowledge that need and to be supportive of it. I think
13 that's very helpful.
14 MR. LEWIS: Well, I think this industry has a
15 reputation, at least in the air quality arena, of being
16 resourceful and creative. We certainly -- you know, we
17 drafted the most strict dust control provisions in the
18 world with South Coast. We were responsible for creating
19 the legislative authority so you could adopt the PERP
20 program. So we're no strangers to the industry and we
21 understand the need to cooperate and we're asking for a
22 little flexibility in terms of how we manage our business
23 in exchange.
24 CHAIRPERSON NICHOLS: Thank you.
25 MR. LEWIS: Thanks.
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1 CHAIRPERSON NICHOLS: Okay. We are going to be
2 taking a break at 3:30, but I'll call a couple of
3 additional witnesses at this point. We have Skip Brown,
4 Bruce Balala, and then Mike Whelan, who was up here before
5 by mistake.
6 MR. BROWN: Good afternoon, Chairman Nichols and
7 the Board. Thank you very much for this opportunity. My
8 name is Skip Brown. I'm president and owner of Delta
9 Construction Company. Been in business in the state of
10 California for 64 years, at this time, trying to survive
11 to 65.
12 I've got the same comments to make about the
13 staff. They've done -- they've done an excellent job of
14 listening, although the results have been somewhat spotty,
15 in my opinion.
16 But one of the major things I wanted to make -- I
17 want to make this quick -- is the tax base. The tax base
18 in the state of California comes basically from the small
19 community. I believe my firm, I used to be small, the
20 Board made me big. Medium size. Now they've made me
21 small again. I appreciate that. Thank you very much. I
22 think you really -- I only got one crew. You know, I
23 mean, how I got to be medium.
24 But anyway, I think you need to take another look
25 at the medium limits because the major tax base comes from
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1 the small contractors. That's the major employer. And I
2 say the major tax base on the basis of I've done a survey
3 of my own company, the taxes paid on a $10 million volume
4 my firm paid or caused to be paid $1.446 million in taxes
5 to the state of California and the federal government.
6 And out of this amount of money, $320,000 in sales taxes
7 were paid on construction products that I buy. Now you
8 could say that, well, if we lose a few small firms,
9 construction products will still be sold. But that's not
10 true. The large companies do not pay this sales tax. The
11 reason is, is they don't sell the material, they
12 manufacture it for themselves and it goes to the customer.
13 It's the small contractor and the medium contractor that
14 buys this material from the large contractors and then
15 pays the sales tax.
16 So when you take out one small business with 20
17 employees, you've taken $320,000 in sales taxes that go to
18 the state of California out of the picture. And I don't
19 think that's wise. I think that the pebble that we're
20 throwing into the pond amounts to a boulder for the small
21 and medium contractors. And I think that the tsunami wave
22 that's going come out of that boulder will make the 1400
23 unemployment picture look somewhat puny. I think it's
24 going to be considerably larger.
25 With that said, I really think that the industry
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1 is really trying to step up and meet this. We all want
2 clean air. I've got children, I've got grandchildren. I
3 have two daughters, Erik, I'm sorry, they're both taken.
4 I've got a son, but let's don't go there.
5 We are trying to step up. We'd like to survive
6 in business. I'm on my way out. I'm in my reclining
7 years, I guess, is a nice way of putting it. But I'd like
8 to see this 64 year business go to 65 and to 70 and 75.
9 So we need to look at your size limits for your
10 medium contractors. We need to give the people that don't
11 have these Moyer programs a break and allow us to try to
12 survive in this industry and continue to pay the taxes to
13 the state, which we all needs pretty badly, we can't even
14 pass a budget.
15 Thank you very much.
16 CHAIRPERSON NICHOLS: Thank you. And with we
17 have one question here.
18 BOARD MEMBER D'ADAMO: I have a question of
19 staff. Mr. Brown raises a point that I don't know how
20 many fall in this category. He said he was small, then he
21 was big, now he's small again. For those that are sort of
22 on the fringe, that end up suffering from the business
23 cycle downturn, can they recalculate so that if they have
24 a year that is slow in terms of actual use, could they
25 recalculate, say they're medium in one year, next year,
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1 they're considered small?
2 CHAIRPERSON NICHOLS: This was raised by another
3 witness and I had it on a list of questions, also. I
4 think it's a good we one.
5 MR. BROWN: Well, it's based on horsepower. If
6 you have 2501 horsepower, you're medium. And if somehow
7 or another --
8 CHAIRPERSON NICHOLS: Even if you're not using
9 your equipment?
10 BOARD MEMBER D'ADAMO: Yeah, what about in terms
11 of use?
12 MR. BROWN: Well, no, it's just horsepower.
13 Well, the 100 hour limitation, now, the two and a half
14 weeks that you're allowing us to use it and not being
15 charged for may fit into that picture, if we just didn't
16 use it at all.
17 CHAIRPERSON NICHOLS: Right.
18 MR. BROWN: If I'm not using a piece of equipment
19 for two and a half weeks, I don't own it.
20 CHAIRPERSON NICHOLS: Okay.
21 BOARD MEMBER D'ADAMO: I don't know the answer,
22 but it does --
23 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
24 But I think --
25 CHAIRPERSON NICHOLS: Oh, there's a comment here.
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1 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
2 So I believe the question was what happens to like small
3 fleets that grow over time and become medium, do they
4 suddenly have to comply with the medium fleet
5 requirements, that's the question?
6 BOARD MEMBER D'ADAMO: Well, I hope they grow,
7 but I think the concern we have is what happens if it's
8 the other way around?
9 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: The
10 question is can they contract if they need to when there's
11 a business downturn?
12 CHAIRPERSON NICHOLS: Right.
13 BOARD MEMBER D'ADAMO: Sure.
14 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: And
15 the answer is yes. In other words, they can, they can set
16 aside some of their horsepower and not count it. But
17 then, if they need to bring the horsepower back in, then
18 they have to bring it into compliance. So there is a, for
19 the ones on the fence, there is a system which, which
20 allows them to do that.
21 BOARD MEMBER BERG: Yeah, but I think we need to
22 be very careful here because this sizing of these
23 businesses has to do with horsepower, not with revenue.
24 So when you have a downturn and you have a downturn in
25 revenue and they have a compliance schedule, which they
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1 have to comply with a certain percentage regardless of the
2 credits and how they can schedule it, but a certain
3 percentage of NOx and a certain percentage of PM, they
4 could effectively sell a piece of equipment and,
5 therefore, have that much less horsepower which then would
6 solve some of the problem. But for them to put a piece of
7 equipment into non-use, when the revenues came back up
8 they not only would have to bring that piece of equipment
9 up to compliant, but they would have to be back on -- they
10 would have to make up the percentage that they were down.
11 So we've got to be careful because this --
12 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: I
13 think we can work that.
14 BOARD MEMBER BERG: -- regulation does not allow
15 for a downturn in revenues.
16 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:
17 Well, I think that the way it's set up, though, they
18 could, and I think that is what's very likely to happen,
19 is they, they can park horsepower that is sort of marginal
20 in use anyway or the most marginal in use, and then, and
21 then put it into low use and not bring it back in. So if
22 they keep it under a hundred hours a year, following the
23 downturn, they could basically keep it as a piece of low
24 use equipment that doesn't show up on their count of
25 horsepower. It's only when they decide that they really
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1 need to run that equipment a lot and put it back into high
2 production mode that they would have to make it comply.
3 BOARD MEMBER BERG: And they'd have to make that
4 comply plus the other new eight percent or 20 percent.
5 It's still a cascading effect, I believe.
6 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:
7 Yeah. Well, I hear what you're saying. I think that
8 you're saying that basically if they, if they're jumping
9 back and forth, they could be jumping back and forth
10 between timelines when they change categories. And I
11 think that's something staff -- we could work -- right,
12 that's what I'm saying, they jump back and forth. I think
13 that's may be something staff could work with to try and
14 make that.
15 BOARD MEMBER BERG: Okay, thank you.
16 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
17 Can I -- can I clarify --
18 CHAIRPERSON NICHOLS: Excuse me. Let's have one
19 person speaking at a time here. Did you have another
20 comment?
21 BOARD MEMBER RIORDAN: Well, I just wanted to
22 build on that. In talking to one of those construction
23 companies that we reviewed with staff, we talked
24 specifically about that and about taking out of service
25 certain pieces of equipment, and I turned to the owner and
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1 I said: And if you bring them back, obviously that means
2 you're bringing them back because there's a revenue stream
3 that you've got a job that you want to do. So when you
4 bring them back and you have the ability to retrofit them
5 or do whatever you need to do to make them part of your
6 fleet, then that would be okay with you? And he totally
7 agreed with that premise, oh, sure, I can do that.
8 So I know that in reality there's at least one
9 company out there that totally agrees with what staff is
10 saying.
11 MR. BROWN: Well, if I may, I disagree with that
12 premise. I've survived four recessions. I can't? Oh,
13 I'm sorry.
14 I've survived four recessions in the 40 some
15 years that I've been active in this business. And I can
16 tell you that when it comes back around, it doesn't back
17 around with all kinds of gold on the horizon. You start
18 to get going and you get a little bit more and you get a
19 little bit more. And you can't just bring a piece of
20 equipment back in and just spend a lot of money on it,
21 because we're still trying to pay back the bank that got
22 us through it, which, by the way, I brought these
23 headlines of yesterday's newspaper, "Record Home
24 Defaults," and this is a good subject matter that you're
25 talking about. And I really hope you come up with some
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1 way of solving the problem, should there be a serious
2 downturn in the market.
3 CHAIRPERSON NICHOLS: I think you've made a good
4 point, and I think we will be discussing it further.
5 Staff, do you have an additional comment that you
6 wanted to make? I didn't mean to cut you off.
7 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
8 Okay. I thought it would be useful to clarify what's in
9 the proposed language right now. There's a couple things,
10 one is if a fleet changes size from small to medium, they
11 have two years to meet the medium fleets requirements. If
12 they go from medium to small, they can immediately start
13 just complying with the small fleet requirements.
14 Now, on the issue of what if I have a piece and
15 there's an economic downturn and my usage drops below the
16 low use threshold, you could choose to designate it as low
17 use and count it as part of whatever required turnover you
18 would have had to do, or if you know, gosh, you know, I'm
19 just waiting to get another project next year, I may need
20 to use it again, you don't have to count it as that.
21 So it isn't like you automatically have to
22 designate it as low use and then suddenly control it when
23 you -- when the usage increases again. If you do choose
24 to designate it as low use, you're sort of promising,
25 okay, I've looked ahead, I'm not going need to use this as
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1 a backup piece. I'm not going to need to use it more than
2 a hundred. If you then subsequently decide to add this
3 piece back into your fleet, you would have to meet the
4 add-in vehicle requirements. And so that's when it would
5 have to be cleaner than a certain amount. So cleaner than
6 Tier 2 at the beginning and then cleaner than Tier 3
7 towards the middle of the reg.
8 CHAIRPERSON NICHOLS: Okay. Thank you. We're
9 going to take our afternoon break now. And I'm going to
10 ask people in the audience if you know that you're not
11 going to testify, please let the clerk know so they can
12 take your name off. And if you have suddenly been seized
13 by the urge to speak and you weren't on the list, I want
14 your name on the list by the time we get back because
15 we're going to close the list of witnesses at this point.
16 So we'll see you back here at quarter of.
17 (Thereupon, a recess was taken.)
18 CHAIRPERSON NICHOLS: All right. Ladies and
19 gentlemen, we have about 30 witnesses, I believe, left to
20 go. We need to move on.
21 Is Bruce Balala here? He's going to be next.
22 Mike Whelan and Kathleen Phillips.
23 Mr. Balala, you've been patiently sitting in the
24 front row.
25 MR. BALALA: Hi.
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1 CHAIRPERSON NICHOLS: Hi.
2 MR. BALALA: My name's Bruce Balala. I'm Bruce
3 Balala Excavating. I'm the smallest contractor here, I
4 guess. I got me. I'm the only owner-operator. I operate
5 in Solano County. I have 25 mowers of different
6 configurations. They're all Tier 0. They're all earlier
7 than '92. And I never got any Moyer's money at all.
8 Whenever I'd mention it, they just didn't give it to you.
9 I mean, I don't run 50,000 miles a year on my trucks. The
10 tractors do go more than couple hundred hours, something
11 like that.
12 So all this particulate traps and all that stuff
13 is going to come out of my pocket. And the tractors were
14 legal yesterday. I don't even know they'll be legal
15 tonight, you know. Financially it's a disaster because
16 what happens is you have the old debt that you got to pay
17 out, and if you people make the tractors not qualify, then
18 you have to get new tractors. But you can't use the old
19 tractors and you still have the debt from that. You got
20 to go out and buy some more tractors when are much more
21 expensive than the use I use. And so you, it just
22 financially can't work, just like Mr. Downs said.
23 I'm trying to make it, you know, stay positive.
24 But what happens is you get people in the corner,
25 sometimes it doesn't work so good. They fight back, you
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1 know. And nobody's mentioned eminent domain, but this is
2 kind of what it is. I mean, I'm not a lawyer and I don't
3 know for sure whether it qualifies. But both the state
4 Constitution and the federal Constitution guaranteed just
5 compensation when you lose property. When you lose
6 property to the government. And that could make your
7 program cost a lot more than you're talking about.
8 So I think you got to make sure that somehow
9 we're not killing -- you're not getting the guy's riled
10 up. Everybody is really on your side. They want to do
11 it. But we're all in business and banks just don't give
12 them money for free.
13 I was suggesting that maybe you could figure the
14 whole cost of the thing, and then actually make a tax out
15 of it and spread it over the people, the total number of
16 people, because what you're doing is everybody, all the
17 air breathers here are, are getting the benefit, but
18 you're taking it out on the contractors. I'm not sure
19 who, one of your members here said that you weren't trying
20 to punish us, but, geez, from down here, it sure looks
21 like it, you know.
22 Anyway, I just wanted to say that small
23 contractors don't seem to be very well represented here.
24 They haven't got the word out. If you send out 240,000
25 postcards and these are all people that are here, I mean,
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1 that's not even representative.
2 So anyway, I just notice that the people who want
3 the health benefits are the ones that are for, for asthma
4 and so forth, they're the ones that are all telling us,
5 yes, you have to except the program. And on the other
6 side, the guys that have to pay for it aren't. And so I
7 think you got to work out the funding better. It sounds
8 like you got a pretty good program, that, you know, we've
9 worked out a lot of the details and still working on it.
10 But you got to make it so it isn't killing the little guys
11 'cause, otherwise, at you'll get legal challenges, even if
12 they're not successful, and it'll slow your program down.
13 I think you want to have people all be on your side.
14 CHAIRPERSON NICHOLS: Thank you, Mr. Balala.
15 MR. BALALA: You're welcome.
16 Mr. Whelan, Kathleen Phillips, Jessica Henn has
17 already spoken, and then Linda Weiner.
18 MR. WHELAN: You already know who I am.
19 CHAIRPERSON NICHOLS: We do.
20 MR. WHELAN: I rise in opposition to the proposed
21 regulation as it is written. While positively
22 appreciating the goal the Board to reduce off-road diesel
23 NOx and particulate materials, and the efforts of the
24 Board staff to do it well, I'd like to make two statements
25 and make some suggestions.
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1 Most effective leaders don't ask their followers
2 to take on a task unless they have accomplished that same
3 task themselves. In addition, most effective leaders
4 spend their own money first on R&D before demanding
5 sweeping changes from stakeholders to implement unproven
6 technology.
7 The state of California, each county in
8 California, each town and city in California has a
9 significant fleet of off-road diesel equipment. I suggest
10 that we start this project by implementing the regulations
11 on each piece of this equipment first. Instead of
12 exempting it. Let them choose their options. Keep the
13 required records and provide the required routine and
14 emergency services expected of them for the first phase of
15 implementation. Let them start immediately if they
16 choose. But require them to start in 2009.
17 This is a captive fleet that should be easy to
18 study and to evaluate and report results from.
19 In 2012, take a year to prepare a comprehensive
20 report of regulatory compliance, real measured emission
21 reduction, machine productivity changes, manpower
22 adjustments, compliance costs, unforeseen challenges and
23 work arounds, and suggestions for the model of
24 implementation strategies. The rationale is this: The
25 asset value of off-road diesel equipment is quite high
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1 when purchased and it shouldn't be devalued by a premature
2 regulation or retirement. Nor should its productivity be
3 compromised. Routine and emergency work such as
4 snowplowing and removal, shoulder reconstruction, pavement
5 remediation, et cetera, is no more or less demanding than
6 the work that the California contractor risks his net
7 worth on every time he agrees to do a job.
8 No reasonable action of this scope should be
9 implemented without a controlled trial ahead of it. In
10 2013 --
11 CHAIRPERSON NICHOLS: Mr. Whelan.
12 MR. WHELAN: -- require implementation along the
13 lines of the CIAQC recommendation.
14 CHAIRPERSON NICHOLS: Excuse me, you've used up
15 your three minutes. Do you want to summarize your final
16 points there.
17 MR. WHELAN: The final point would be --
18 CHAIRPERSON NICHOLS: I know you've prepared
19 quite a bit of testimony.
20 MR. WHELAN: Yeah. Yeah.
21 CHAIRPERSON NICHOLS: If you want to submit your
22 written testimony or if you already have, we will have it.
23 MR. WHELAN: The final point is that California
24 Resources Board is perceived to have a lot of clout. This
25 has been demonstrated where market forces are a
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1 significant factor. That's not the case with this
2 off-road diesel equipment. And so I would like you to
3 take that into consideration. I would like to you take my
4 suggestions into consideration. And I urge you to oppose
5 pose the regulation as currently proposed.
6 Thank you.
7 CHAIRPERSON NICHOLS: Thank you. And we do have
8 your written comments here.
9 Kathleen Phillips, followed by Linda Weiner, and
10 Gregg Oxley.
11 MS. PHILLIPS: I'm Katherine Phillips with
12 Environmental Defense. And I'm bringing back the thing
13 about what you should say to the benefit of the court
14 reporter. Carolina accidentally walked away with it.
15 I just wanted to make a few quick comments about
16 some of the issues that have been raised. One is I really
17 do appreciate all the effort staff has gone through over
18 the last three years. We have followed this rule probably
19 as closely as anybody in the industry has followed the
20 rule. We have had a lot of arm wrestling matches with the
21 staff. They have been very effective in, in using science
22 and good analysis to come up to the conclusions that we
23 didn't always appreciate or approve of, but we could
24 always be confident in the end that it was factually
25 based. And we're -- we appreciate that and we also
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1 appreciate staff's patience.
2 Given that, I would like to just note, again,
3 that as staff analyzed analysis showed today, if you
4 change the PM targets from an annual target, you do end up
5 to a two or three year target. You do end up with a
6 disbenefit in health impacts, so you won't get as great a
7 reduction in emissions. So I would like to reemphasize
8 the need to keep those targets annual.
9 I understand the industry's desire for more
10 flexibility you, but I think it's important to point out
11 that this rule has a lot flexibility built into it and
12 that flexibility has been built in at request of industry
13 over the last three years. Sometimes we've gone kicking
14 and screaming as environmentalists thinking that that was
15 going too far, but it is still in there and I think that
16 needs to be taken into consideration.
17 About reports. I think the idea of doing some
18 reports on what's going on with the technology is a good
19 one. That's, but I would suggest that maybe January 2009
20 is too soon. You won't be able to tell what the price is
21 actually going to be until the market starts up. This
22 also would be probably just about a year after this is
23 formally kind of going into effect, after you get through
24 your 45 days or 15 days and all that. So I would suggest
25 that you not have that first report until 2010, at the
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1 earliest. 2011 would probably make more sense.
2 Verification. I think everybody recognizes that
3 there needs to be more resources for CARB for getting
4 staff, as much staff as they need for verification. I'm
5 certainly committed to helping if that needs to be a play
6 in the budget next year, if you need environmental help,
7 you have that.
8 Moyer and other incentive money. There are a
9 number of efforts going on, and I think that things are
10 finally coming to a -- starting to gel to help raise
11 additional incentive money. We worked with the
12 Legislature last year to get some budget money and for
13 some construction equipment that was used by public
14 fleets. I know that we've worked this year to try to get
15 some additional budget money in for that would have
16 allowed some additional Moyer money. That was rejected by
17 the industry. I think, though, that there are other
18 opportunities to find additional incentive money. Some of
19 it may have to have different kinds of rules than Moyer to
20 ensure that some of these very small companies, both in
21 this industry and others, have access to money longer.
22 Finally, I just want to -- a couple of things.
23 The SOON program, that's a great idea. It ought to be
24 extended to more than a couple of districts. There are
25 more than a couple of districts that could use those extra
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1 NOx reductions.
2 And finally, the role of trade associations. I
3 think a lot of the issues that have been raised today
4 about difficulty in understanding the rule, difficulty in
5 figuring out how each company will be able to accommodate,
6 this seems like something that would be ideal for the
7 trade association to participate in. A couple of years
8 ago or -- I was in a meeting and I was complaining about
9 how the trade associations, the Associated General
10 Contractors, had spent a lot of time complaining about
11 upcoming rules and then other things we've done over at
12 the Legislature to try to clean up construct equipment,
13 but they hadn't started doing anything to inform their
14 members about the Moyer program.
15 One member of the AGC heard me and started
16 organizing some seminars around the state to inform
17 members about the Moyer program. I think that's the kind
18 of thing that would be appropriate for these trade
19 associations to do and probably more productive than
20 stirring up their members with misinformation about what
21 this rule does and doesn't do. And I think going forward,
22 the trade associations could play an important rule in
23 helping link CARB to their members to do some analysis
24 about how they -- their members can best comply with this.
25 Thank you. I look forward to seeing a good rule
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1 adopted today. And, again, I just want to compliment the
2 staff for the good work they've been doing.
3 Thanks.
4 CHAIRPERSON NICHOLS: Thank you.
5 Ms. Weiner, Mr. Oxley, followed by James Thomas.
6 MS. WEINER: Good afternoon. My name is Linda
7 Weiner, I represent the America Lung Association of
8 California. And we're here today to express support for
9 this regulation. We believe it to be cost effective,
10 flexible, reasonable, and affordable. Certainly given the
11 health costs related to the projected pollution. CARB's
12 study says the health of implementing the regulation are
13 substantial, and they are.
14 You've heard -- I won't go through the whole
15 litany of numbers, but, obviously, the long term effects
16 of the premature death and short term and every day
17 effects of asthma, bronchitis, chronic obstructive
18 pulmonary disease, heart disease, and not to forget the
19 680,000 fewer work loss days. With 18 to $26 billion
20 saved in health care costs, whether it's 3 billion or even
21 13 billion in terms of construction costs, you still have
22 a stronger economic health benefit savings, and that's
23 something important to remember.
24 I also don't want to forget in terms of health
25 impact that the health impacts are especially dangerous to
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1 low income communities that are already overburdened with
2 multiple sources of pollution and often suffer
3 disproportionate health impacts, to say nothing of the
4 workers that work around this equipment day in and day
5 out.
6 Every year, as you can see, new research sheds
7 new light on the impact of air pollution. And as people
8 have already said, in addition to the health benefits,
9 California will not be able to achieve the federal air
10 quality standards for both NOx and PM in 2015 without
11 strong regulations of construction equipment and the cost
12 of being in violation, as you know, is billions of dollars
13 in state transportation funds.
14 We believe there's been a extensive public
15 process, over three years, extensive state outreach to the
16 regulated community with much investigation and
17 recognition of industry issues and concerns, much of which
18 has been written into the regulation now.
19 We would like to say we support the opt-in
20 provision, but, again, if we can be open to all air
21 districts, we would strongly prefer that. We do not
22 support the idea of multi-year targets simply because
23 compliance targets ensure a steady decrease in emissions
24 over the life of the regulation. And this is critically
25 important to reduce the emissions from the oldest
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1 polluting equipment as soon as possible. Recent surveys
2 showed that over 50 percent of construction equipment is
3 either uncontrolled or the Tier 0 equipment. We also
4 believe proposed regulation currently has the ample
5 flexibility to allow companies a choice of feasible
6 technology. We feel additional flexibility would delay
7 reduction of emissions and this rule has been written, we
8 feel, with generous timelines and incentives.
9 And now for a personal note. I have been
10 involved in the public health arena for 25 years. Much of
11 that in policy. And just to give some historical context,
12 as I'm sure you're aware, any time a new industry sector
13 is regulated, whether it's tobacco industry or auto
14 industry, the claims -- there are claims about cost of
15 compliance and often understandable. But California has
16 always taken the lead by forcing technology with air bags,
17 seat belts, catalytic converters, and other vehicle
18 controls, California has always benefited by taking the
19 lead. As with other CARB diesel regulations, this
20 regulation will provide many more benefits to public
21 health and the cost of the regulation.
22 The public and other industries are already on
23 the hook for cleaning up smog and soot. We feel it is
24 time for the construction industry to do their part and we
25 believe the Board should adopt a strong clean construction
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1 goal. And I do want to say thank you to the CARB staff
2 for of your work and to the Board for your endurance. And
3 thank you for the opportunity.
4 CHAIRPERSON NICHOLS: Thank you, Ms. Weiner.
5 Appreciate it.
6 All right. Gregg Oxley, James Thomas, Geoff
7 Boraston.
8 MR. OXLEY: Good afternoon. My name's Gregg
9 Oxley. I'm representing Al Waggoner Construction. We're
10 a general engineering construction in Ripon, California.
11 We've been in business for about 20, over 20 years in the
12 Valley. I wanted to make a comment sitting here listening
13 to the testimony, that I find it interesting that there's
14 been a number of people who have come up and said that
15 this rule, as written, is flexible, it's affordable, it
16 makes sense, although I've heard nobody that makes their
17 living owning and operating heavy equipment say that.
18 Our company, like many others in the Valley, was
19 built one piece of equipment at a time. The company was
20 started by my father-in-law and mother-in-law. And was
21 run on credit cards to begin with. When we talk about
22 equipment turnover rates, we still own and operate the
23 very first excavator and the very first backhoe that were
24 bought by our company.
25 The other thing that scares me about this
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1 regulation is that, like any other company, we have built
2 up over the years and our equity and ability to bond for
3 jobs is wrapped up in that equipment. The first year that
4 this regulation goes into effect and that equipment is no
5 longer to be able to be sold or purchased in the state of
6 California, that equipment value is going to take a
7 nosedive. Our bankers and our bonding agents are going to
8 be looking at that the first year that it happens.
9 The regulation, as written, is going to force us
10 to comply in two or three possible ways. The first would
11 be taking on new equipment payments. We've looked at our
12 fleet. We've analyzed it. We've talked to the experts.
13 Better than 70 percent of our fleet is Tier 0 and Tier 1.
14 There are no retrofits available. The industry is
15 concentrating on much larger pieces equipment than what a
16 small underground contractor uses or is practical for our
17 industry. A loss of equity, obviously, to the plummeting
18 equipment values. And if we choose to comply by reduction
19 of our fleet size we will also reduce jobs. Because every
20 piece of equipment that I have to retire, I'm going to
21 retire an operator and probably two to three laborer that
22 would follow that equipment around on a daily basis
23 working.
24 To give you an idea, we've analyzed this and
25 we're estimating that the first year of compliance for us
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1 will take between 250 and $300,000. If we buy a new piece
2 of equipment, we would take it out on two to a five-year
3 loan. Probably, actually, more likely three to five
4 years. We would be forced to do this every year. We
5 simply can't afford it. I'm not going to stand here and
6 say that it's impossible for us to survive with this rule
7 in place, but it makes it considerably scarier of a
8 proposition with this in rule in place.
9 The administrative staff has made reference in
10 their presentations that a lot of these costs will be
11 spread out and I'd like to address a couple of those
12 things real quickly. One is that they would be passed on
13 to the customer. Well, anybody who has been in
14 construction knows that this is an extremely competitive
15 industry in the state of California. Our jobs are won by
16 dollars, not by tens of thousands or hundreds of thousands
17 of dollars. So if we try to pass on the cost of new
18 equipment to the customer, we will simply bid ourselves
19 out of a job.
20 CHAIRPERSON NICHOLS: Mr. Oxley, you are out of
21 time.
22 MR. OXLEY: Am I out of time? Okay.
23 CHAIRPERSON NICHOLS: If you can summarize, if
24 you want to make a last point.
25 MR. OXLEY: Well, I would like to make three
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1 recommendations. One would be that if the companies
2 choose to comply by buying newer machines, then the Tier 3
3 machines or above should be excluded from their overall
4 horsepower, that it doesn't penalize them and put a
5 heavier burden on the older machines.
6 Two would be to expand if hours from limited use
7 equipment to over a hundred.
8 And three, if the V-dex technology is that
9 practical, and we can get compliance on a Tier 4 or Tier 5
10 basis with those additions, then why do we have to get rid
11 of those pieces of equipment at all.
12 Thank you.
13 CHAIRPERSON NICHOLS: Thank you.
14 Okay. Mr. Thomas, Jeff Boraston, Ted Stevens.
15 MR. THOMAS: I'm James Thomas with Nabors Well
16 Service. I'd like to thank you for the opportunity to
17 speak. I'd like to start with talking about the early
18 repowers in the regulation. It has a credit for repowers.
19 And you get it on NOx, but you do not get it on PM. And I
20 would like to note that the reductions that my company is
21 experiencing is 71 percent in NOx and 80 percent in PM,
22 yet we don't get any credit or there's no credit built in
23 the regs for PM.
24 So, today, I want to try to bridge some of the
25 differences I keep hearing as I'm sitting in the audience.
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1 First of all, I've heard, talking about passing this cost
2 on to your competitors. I'd like to tell you what happens
3 in the real world. When you walk into the marketplace,
4 you walk in to get bid on your portion of that business.
5 And while you're there, you're like me, a large fleet.
6 And there beside you is a medium fleet and a small fleet.
7 And we're going pass this cost on to these people. As a
8 large fleet, you will not pass the cost on until five
9 years, whenever the field levels and it's a level playing
10 field for all, then you can pass on the cost. So that is
11 one thing.
12 The next thing I keep hearing, well, you can buy
13 new equipment. Well, I'd like to tell you about any
14 industry. Between 1984 and 2005, that's a 21-year period,
15 not a single workover rig was built. So, if that's true,
16 the only opportunity we have is for repower. I am proud
17 of my company. We have repowered 72 percent of our fleet
18 today. And of that 72 percent and with that 72 percent, I
19 cannot comply with this regulation.
20 I'd like to talk about the cost of repowers. And
21 here's the disconnect between the analysis. Now, I didn't
22 do, I didn't run a program and I didn't do any
23 spreadsheets. I just looked at my fleet. When you look
24 at the staff report on page 41, they say that if you're a
25 large fleet between the ages of 20 years and greater, that
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1 the cost for compliance in this regulation is between 110
2 and $180 dollars per horsepower. Well, I'm here to tell
3 you, when you repower 72 percent of your fleet, you kind
4 of learn. And in that process, it cost us $330 to repower
5 that engine. And that's a 450 horsepower engine. And
6 staff will tell you, well, the difference is, is JT, they
7 called me JT, JT's cost, is he has a transmission in
8 there. Well, guess what? You have to have a
9 transmission. When you have an engine that doesn't marry
10 up to the transmission, then you have to have a
11 transmission. So the cost is different. You have to
12 engineer. You have to cut the frame. You have to put in
13 larger radiators. But we're doing it. We're going from
14 Tier 1, Tier 2, Tier 3. And whenever Tier 4 comes out,
15 we'll go to that.
16 The last thing I want to talk about is V-dex.
17 And this is where the biggest disconnect. And this where,
18 as an end user, I'm petrified. First of all, we've got a
19 quote, for 450 horsepower engine, is $23,00 for my V-dex
20 to go on that engine. That's 51 horsepower.
21 Now, the HUSS guy was here and he said that you
22 can operate for two hours and then you can generate.
23 There's a small problem. I operate ten to 12 hours a day.
24 So if I operate two and regenerate 30 minutes, and operate
25 two and generate, I'll never get home. I'll never get
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1 home.
2 The next thing is he, you talk about the useful
3 life, you talk about the useful life of these, these
4 filters. They're warranted for 4,200 hours. I have an
5 engine today that has 36,000 hours. How many filters is
6 it going to take to put on that unit. The HUSS man, if
7 you notice, had two on the 450 horsepower engine and he
8 could operate two hours. Am I'm going to have to have
9 four. Are they going to operate for 15,000 hours and then
10 I have to do it again.
11 CHAIRPERSON NICHOLS: Excuse me, sir.
12 MR. THOMAS: That's the difference between these
13 regs.
14 CHAIRPERSON NICHOLS: Okay. Thank you. You
15 ended just about as the bell was about to ring.
16 Geoff Boraston, Ted Stevens, Richard Taliaferro.
17 MR. BORASTON: Good afternoon, my name is Geoff
18 Boraston, and I represent Granite Construction Company.
19 We're a California based contractor. We've been here
20 since 1922. We probably own one of the largest fleets in
21 California represented here today.
22 In concept, we're in full support of a regulation
23 like this. We think it's in everybody's long term
24 interest, including industry's long term interest.
25 With respect to the, you know, specific language
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1 that's before the Board today, we do have a few concerns.
2 One concern, you know, towers over all the other concerns.
3 And that's basically that we don't know how we're going to
4 do this. And you've heard this from other contractors,
5 today. Our first targets are March 1st, 2010. That's our
6 first compliance deadline. To ramp up for compliance, we
7 need to be able to start installing V-dex early next year,
8 early 2008, and that's coming fast. I mean my daughter's
9 in school in three weeks. This year is going by very
10 quickly. And to start implementing a compliance program,
11 we need to have a selection of V-dex that we can install.
12 That selection is not there right now. And in order for
13 us to plan for compliance, we need to have an assortment
14 of V-dex, so the V-dex can be best suited for the machine
15 application.
16 And there is an off-ramp in the regulation
17 related to the safety. It's a very narrow off-ramp. It
18 is certainly not enough to satisfy our concerns.
19 We have, you know, we're fortunate enough to have
20 a -- really a first-class equipment department. And these
21 guys are very sophisticated. They're very technical.
22 They're engineers. They know the equipment. They know
23 the businesses. We've researched the V-dex. We also have
24 an operation in New York, and working out of the New York
25 Trade Center and other locations in Manhattan. We have a
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1 contract there. And we're running some of these diesel
2 particulate filters. We have experience with them. And
3 in summer, they're a problem. I mean this is not a simple
4 just slap it on and make it work. And, but incidentally,
5 these, these devices that we can use in New York, we
6 cannot use them in California. They're not verified by
7 CARB. And we're in a situation where we're dependent on
8 CARB approving a regulation to create a market to attract
9 vendors to the marketplace and go through the verification
10 process. And that takes time. And if there is an
11 appropriate selection of V-dex available, we're certainly
12 willing to employee them.
13 But as things sit right now, we cannot come up
14 with the plan for complying with this regulation. And in
15 the time frame that we have between now and the time we
16 need to start installing these V-dex, which would be early
17 2008, we don't see how we're going to get there. And that
18 is probably the crux of our most serious concern.
19 The second one, which we voiced again and again
20 is ensuring that there's a level playing field. This
21 regulation is very burdensome on contractors. There is
22 180,000, over 180,000 pieces of equipment out there that
23 are going to be difficult to find. And it's expensive
24 enough that companies could gain a competitive advantage
25 but not being in compliance. And that doesn't include the
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1 people here today. The people that are here today are
2 here because they intend to be in compliance. But this is
3 an extremely small minority of equipment owners in
4 California.
5 And so we believe that the enforcement mechanism
6 in the proposal, today, the language, really is not strong
7 enough. We think there needs to be much stronger
8 enforcement.
9 And lastly, with respect to the SOON program,
10 this is an 11th hour deal that's just recently come
11 through. It's really not right for consideration. It
12 hasn't been thought through. It hasn't been vetted.
13 There's certainly been no workshops on it. And we would
14 recommend to the Board that that proposal needs further
15 consideration before it's adopted.
16 CHAIRPERSON NICHOLS: You're out of time.
17 MR. BORASTON: I'm out of time? Okay. And that
18 was the last point so --
19 CHAIRPERSON NICHOLS: Oh, excellent.
20 MR. BORASTON: -- perfect timing.
21 CHAIRPERSON NICHOLS: Well done.
22 MR. BORASTON: Okay, thank you.
23 CHAIRPERSON NICHOLS: Thank you. Appreciate your
24 comments. Do you have a suggestion -- I guess I'm going
25 to ask you a question, it'll give you one more second.
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1 Excuse me. There's one more question about the
2 enforcement issue. What -- do you have a specific
3 suggestion on what you want to see in the way of the
4 strengthened enforcement program.
5 MR. BORASTON: We had made a suggestion that
6 there be periodic third party verification of the
7 compliance reports. And this could be in the form of, you
8 know, spot checking equipment against the inventories. It
9 may not be a matter of checking every piece of equipment,
10 but something like an accountant checks your books where
11 they do spot checks.
12 CHAIRPERSON NICHOLS: Uh-huh. Okay. Thank you.
13 Thanks.
14 All right. Mr. Stevens, Mr. Taliaferro, Adam
15 Harper.
16 MR. STEVENS: Good afternoon. My name is Ted
17 Stevens. I'm an employee of Blue Mountain Minerals. I
18 believe we're the first mining company that you've heard
19 from today.
20 CHAIRPERSON NICHOLS: That's true.
21 MR. STEVENS: I'd like to tell you about the
22 uniqueness of our situation and ask for your help in
23 dealing with that. We own and operate a dolomitic
24 limestone quarry in Tuolumne County. We employ 60 people.
25 Because of the nature of our operation, we're a small
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1 company with very big equipment. Unlike a lot of the
2 construction fleets you've heard about. We also operate
3 in a low population county.
4 We have worked with staff several times. We're
5 one of the companies that you heard about that met with
6 them and shared our fleet information and they were very
7 helpful with us. We thanked them for their time and their
8 effort in explaining to us how to use their models and we
9 worked to model our compliance with the rule.
10 Unfortunately, we never reached a consensus on the cost.
11 I'm not going to repeat -- we have a very similar story
12 that you've heard from everyone else today in terms of the
13 cost.
14 One of the uniqueness we have is that our prices
15 are not set by bids. They're -- our products are low cost
16 and they are dependent on transportation. We can't ship
17 very far. We're one of the very handful of mines left in
18 California that produce this material. And we have very
19 long term price commitments with our customers. They're
20 in glass manufacturing, farmers. We sell -- that's used
21 to reduce sulphur emissions, things like that. So we
22 believe that the estimates that you've heard today don't
23 apply to us in terms of the ability to pass on costs.
24 And, also, we second or third all of the comments made
25 earlier that we believe the cost to comply with the rule
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1 would be more than the models that we work with staff
2 with.
3 So we're going to prepare ourselves to pay more.
4 And it's going to cost more to comply with the rule.
5 So what we'd ask for your help in is, we believe
6 that the rule already recognizes there are special unique
7 circumstances. And, for example, you've already said in
8 captive attainment areas, they have different compliance
9 requirements. We'd ask that you extend the captive area
10 attainment to our county. This is supported by our Air
11 Quality Control Board and our Assemblyman and our Senator
12 as well.
13 CHAIRPERSON NICHOLS: That's Tuolumne County.
14 MR. STEVENS: Tuolumne County. This would give
15 us a few additional years to be able to prepare and comply
16 with the rule. That's all we're seeking. And another
17 alternative would be to, in low population counties, where
18 the fleets are completely captive in those low population
19 counties, like us, our resources are there, we can't want
20 move anywhere else. And in recognizing that our fleets
21 are higher horsepower than in general, we would ask that
22 you consider an amendment that would increase the
23 horsepower in low population counties so that we could
24 become a small fleet. That would give us a few additional
25 years to be able to pass the financial burden that we
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1 expect of the rule.
2 Thank you for your time.
3 CHAIRPERSON NICHOLS: Thank you very much.
4 Okay. Richard Taliaferro, Adam Harper, Howard
5 Cooper.
6 Mr. Taliaferro? Mr. Harper? Mr. Cooper.
7 Becky Wood, followed by Bradley Reed, and Dave
8 Louden.
9 MS. WOOD: Good day. I represent Teichert. We
10 are a mining and contracting firm that operates in the
11 Central Valley. We've been involved with some of this
12 rulemaking actually since the late 1980's when the diesel
13 risk was being discussed. And in 2000, when the diesel
14 risk plan was adopted, a lot of companies who knew about
15 it and realized the impact it was going to have had two
16 different choices that they could make. Some chose to do
17 absolutely nothing short of the bare minimum that they had
18 to, to keep operating, waiting to see how this all played
19 out and how it would affect their business. Others of us
20 chose to do everything we can to clean up our fleets.
21 Teichert, I believe, has one of the cleanest
22 fleets in the state. We have less than ten percent Tier 0
23 engines. And with that, we still do not meet the PM
24 requirements in this rule, as they are extremely
25 aggressive.
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1 So that does cause us some concern. Staff's own
2 examples in the handouts show the different cost impacts.
3 And even by their own examples, the very cleanest fleet
4 with the newest equipment suffers the greatest economic
5 impact due to this rule. And that just seems a little bit
6 inherently unfair that that would be the result of trying
7 to do early implementation when you knew that diesel was
8 an issue.
9 We also have a concern operating in the Central
10 Valley where ozone is a huge health risk. The diesel
11 particulate is a chronic exposure. It as a 70-year
12 exposure that causes issue. Ozone causes lung damage in
13 small children immediately. So, and we really feel that
14 this rule sacrifices a lot of ozone reductions early on in
15 favor of the particulate reductions which, I agree are
16 very important, but require a longer exposure to in order
17 to have the kind of health impacts that people are talking
18 about. So I would really like to see the ozone provisions
19 of this strengthened, if at all possible.
20 The other problem, which Granite brought up, the
21 availability of V-dex that you can use in Europe. They
22 are approved in Europe. They are approved in New York.
23 They are approved by Federal EPA. We can't use them here.
24 So that does limit the available pool that we have.
25 And then because of these costs differences and
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1 the greater impact on the cleaner fleet from a cost
2 standpoint, we start with -- we start with equipment that
3 has higher depreciation on it, and so, you know, our costs
4 just start out higher. And if there's not even
5 enforcement of this, then we're really going to be at an
6 economic disadvantage. So enforcement is going to become
7 very, very crucial.
8 CHAIRPERSON NICHOLS: You've used up your time.
9 MS. WOOD: That's it.
10 CHAIRPERSON NICHOLS: Thank you.
11 MS. WOOD: Thank you.
12 CHAIRPERSON NICHOLS: And we do have your written
13 testimony. Thank you very much.
14 MR. Reed.
15 Mr. Louden. And then Jose Escobedo, Tara Haas,
16 Mark Watts.
17 MR. LOUDEN: Thank you, Madam Chair. Dave Louden
18 with the California Professional Association of Specialty
19 Contractors. We represent approximately 500 trade
20 contractor and supplier companies throughout the state of
21 California.
22 First issue I would like to bring up on the
23 nonprofit trading center language. Gentleman addressed it
24 earlier. CALPASC, along with many other trade
25 associations, are a 501(c)(6). So if you could also add
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1 that to your definition, that would help us tremendously.
2 One issue our association's brought up in the
3 past is, well, it's real obvious the lack of consensus
4 between the industry folks and the staff here. And what
5 we would recommend is that this Board and the staff
6 contact your counterparts over at Cal OSHA. Cal OSHA has
7 been very effective with their advisory committee process.
8 You've seen various regulations move through that process.
9 And with those regulations, you've seen a significant
10 amount of consensus between all the various stakeholders,
11 be that labor, management and staff of the various
12 regulatory agencies as well as those in the environmental
13 community. So we would definitely challenge this body to
14 contact those folks, may be employ some of their best
15 practices. And maybe that will help incite or create some
16 consensus in the process.
17 And then finally, just like to address that CIAQC
18 has brought to the attention of the triennial compliance
19 component. CALPASC feels strongly that this component
20 would aid significantly in allowing the industry to comply
21 more effectively, and we would ask this Board to examine
22 that when making your vote today.
23 Thank you so much.
24 CHAIRPERSON NICHOLS: Thank you.
25 Jose Escobedo, are you here? Tara Haas, followed
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1 by Mark Watts, and Wilkie Talbert.
2 MS. HAAS: Hi, good afternoon. My name is Tara
3 Haas, and I'm the Director of Government Relations for the
4 Engineering and Utility Contractors Association. And,
5 yeah, we're one of those apathetic trade associations that
6 was mentioned earlier. So I'm going to have to address
7 that comment, because it's my job to make sure that our
8 members are aware of what's going on and that they're able
9 to comply. That's what I do everY day.
10 And I can tell you that I know all of the trade
11 associations that are represented in this room. It's us,
12 it's AGC of California, it's the Engineering Contractors
13 Association in both Northern and Southern California, it's
14 the Engineering and General Contractors in San Diego, and
15 it's the Southern California Contractors Association. And
16 I can tell you that every single person on their staff is
17 aware and is making their members aware of what's going
18 on.
19 And EUCA has taken a further step by contracting
20 with a compliance assistance firm to make sure that our
21 members are able to take advantage of the opportunities
22 out there for early compliance and for compliance
23 assistance along this whole regulation time frame.
24 So I want to just make sure that you understand
25 that we're doing everything that we can as the staff is.
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1 I hope to make the members that are going to be -- or make
2 the members of this industry that are going to be subject
3 to this rule aware of what's going on.
4 Another thing that I wanted to bring up was that
5 there was only nine fleets that they had referenced in the
6 presentation this morning, and I just wanted to be clear
7 that those were the nine fleets that were analyzed. But I
8 talked to some of the other apathetic trade association
9 representatives here, and I counted, you know, over 50
10 fleets that have been submitted to staff. I don't know if
11 all of the information was adequate. I know in some cases
12 of the fleets that I submitted, that they, our members
13 were not able to get the cost information because they
14 weren't able to get it from the manufacturer or there was
15 no retrofit available or they didn't know how they were
16 going to comply. So we have been cooperative in providing
17 feedback to CARB staff.
18 CHAIRPERSON NICHOLS: I think we could stipulate
19 that those nine just happened to be the ones that were
20 there, that made their information available. But we
21 can't consider them to be representative, particularly.
22 They were just people who spoke up and, therefore, they
23 got analyzed.
24 MS. HAAS: And that's great. And I'm
25 appreciating that you're saying that, because I know Downs
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1 was looked at possibly as a worst case scenario, and I've
2 seen worse. So --
3 CHAIRPERSON NICHOLS: I'm sure Mr. Downs will be
4 happy to hear that.
5 MS. HAAS: Anyway, we represent 250 or so, all
6 union, heavy construction contractors throughout the
7 western United States. So I've had a little experience
8 with this. The only thing that I wanted to mention are
9 two things, which is that we do support the idea of
10 increasing the low use hours because that will help some
11 firms that are just on that borderline.
12 And, also, I was wondering if this has been
13 considered. Has there been a cost comparison of the cost
14 to this industry for cleaning up the particulate and NOx
15 emissions versus who else is emitting these emissions?
16 So, for example, is this industry bearing more of the cost
17 to reduce those emissions than they are actually putting
18 in it? I think that's important to note.
19 And I also want to add that in a down
20 construction market like we're in right now, and probably
21 won't pick up, you know, cross my fingers that it will,
22 but it not pick up for a while, you're looking at a 2010,
23 2009 and 2010 deadline at this same time that the portable
24 engine rule, all those Tier 0s have to go away. So you're
25 double-dinging the same industry to clean up the
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1 emissions. And I just think it needs to be noted.
2 Now, then, you go over and you ask, you know, the
3 Governor's office and people on the other side of the
4 street, and they're looking at expanding the industry.
5 The industry capacity expansion. You know. We just
6 passed all these bond measures. Okay, great. But it
7 hurts fleets to expand. If you're a medium fleet, you
8 don't want to become a large fleet. There's no incentive
9 for you to want to grow your company in this -- under this
10 regulation. It's what, CARB staff, I have to argue with,
11 by saying that increasing your horsepower will help you
12 meet this regulation and this's not true. I think you
13 have to look at each fleet and make an analysis there.
14 But overall, I would say that that's not true.
15 So, that's all I want to say.
16 CHAIRPERSON NICHOLS: Thank you, Ms. Haas.
17 MS. HAAS: Thank you.
18 CHAIRPERSON NICHOLS: I extended your time
19 because I've interrupted you, but you're at your end.
20 MS. HAAS: I appreciate it.
21 CHAIRPERSON NICHOLS: Thank you.
22 Staff, do you want to address the issue of the
23 relative cost effectiveness of this rule or the relative
24 burden? Do you -- I know you may -- you have a figure in
25 the staff report that gives a range of cost effectiveness.
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1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, I
2 think there's a number of ways of looking at, but,
3 clearly, in this case, the benefits were upward of
4 $20 billion and the cost are three and a half billion
5 dollars. So I would say that from a cost benefit
6 standpoint, they're not being disproportionately impacted.
7 Yes, there's a rule on some of the other
8 equipment that these people own, but it's really not any
9 different than if they were included in this rule. I
10 mean, there's a piece of equipment that has to have
11 something done it to it under the portable rule and
12 there's pieces of equipment that are not under the
13 portable rule that are under this rule that have to have
14 things done to them. And so I --
15 CHAIRPERSON NICHOLS: It's not the same piece of
16 equipment that's getting two rules. It's the business
17 that was --
18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So, it
19 is, you know, it's got complexity, two different rules, et
20 cetera, but it isn't like it, we're doing something twice
21 to the same twice of equipment.
22 CHAIRPERSON NICHOLS: Right.
23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And I
24 guess the industry that has not had to face this kind of
25 rule, so far, is the trucking industry. And we're working
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1 on that for a rule next summer. So -- and then after
2 that, there's the agriculture industry. So, but other
3 than that, everybody, you know, we've adopted six or eight
4 different rules so far for narrower sectors like trash
5 trucks, buses, portable equipment, stationary engines, et
6 cetera, that are all facing the same kind of --
7 CHAIRPERSON NICHOLS: The Board hasn't been
8 slacking off on adopting rules.
9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah.
10 I mean it's hard to say it that way. You know, gee, we
11 want to get everybody. That's not the point. But the
12 point is that I think there's an equitable approach to
13 trying to put similar requirements on all the various
14 sectors until we meet our emission reduction goal.
15 CHAIRPERSON NICHOLS: I appreciate that.
16 Okay. Mark Watts, are you here?
17 Wilkie Talbert, are you here? Yes, you are.
18 Okay. Followed by Ron Turner and Ted Costa.
19 MR. TALBERT: My name is Wilkie Talbert. I'm --
20 I live in Red Bluff in Northern California, in Tehama
21 County. I'm a member of the Tehama County RAC, the
22 Resource Advisory Committee in forestry issues, and a
23 nonprofit CHC, Citizens for a Healthy Community.
24 My subject is the availability of biodiesel.
25 There was a term, pyrolysis. Pyrolysis is often applied
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1 to a high temperature process that involves a plasma arc,
2 basically using a welding torch to do things. And that's
3 a subject of another discussion with the Board. But not
4 my topic today.
5 My topic today is flash pyrolysis that is at a
6 very much lower temperature, on the order of, oh, 504, to
7 500 degrees C. It's a process that uses the forest wastes
8 and agricultural wastes as feedstock. So they're
9 relatively low cost and fairly widely available.
10 And the -- and more importantly, there are no
11 pollutant elements involved in these wastes. So the
12 product of any process involving them also does not have
13 the chlorines and sulphurs and other pollutants.
14 The process itself yields a bio oil and a char.
15 The bio oils immediately can be used for heating oils,
16 fairly low level of technology. With some refinement,
17 they can be a moderate quality diesel, biodiesel, and with
18 more sophistication, a very high quality biodiesel. But
19 that requires a Fischer-Tropsch process. It's somewhat
20 more expensive.
21 Basically, the flash pyrolysis to develop the bio
22 oils are ones that deal with wood and cellulose. The
23 material is reduced to a fairly fine product, thrown in an
24 oxygen-free environment against a heated steel surface,
25 instantly liquefies and vaporizes and is then condensed
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1 all within about two seconds.
2 CHAIRPERSON NICHOLS: Mr. Talbert, you've used up
3 your time. I'm sorry.
4 MR. TALBERT: Yes.
5 CHAIRPERSON NICHOLS: I know you have information
6 you want to give us about biodiesel, but if you could
7 possibly submit something in writing, that we'd be happy
8 the add to the record.
9 MR. TALBERT: I will submit written material.
10 And I think the essential thing is that this is a process
11 that does yield, that can yield high quality biodiesel and
12 also can be developed in rural communities.
13 CHAIRPERSON NICHOLS: Right. No, I understand.
14 It's a very useful suggestion.
15 Ron Turner, are you here? Ted Costa, are you
16 here? Yes.
17 MR. COSTA: Hello. Thank you very much for the
18 opportunity. I'm with People's Advocate. We're a
19 California corporation doing business here in the state of
20 California. We represent the people who pay the bills.
21 We don't make any bones about that. And we have like
22 about 40,000 members, right about that, and 300,000 people
23 on our mailing list here in the state of California.
24 We've done 13 statewide initiatives and the voters, in
25 their wisdom, have passed ten of those into law in this
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1 state.
2 I'm very concerned, because -- I apologize, I'm
3 getting here late, because I don't really keep up on this
4 Board. But I've had a lot of calls from my members. And
5 they're very concerned. And what I heard here this
6 morning -- two things that have not been answered that the
7 people have stated this morning. One man actually got up
8 here and said that he would double the salary of any of
9 you to go to his place, implement this thing with him not
10 going bankrupt, and that hasn't been answered. That's
11 confiscatory. I go back to my Board and I tell them that.
12 Don't smile, because that's very serious. This is
13 confiscatory.
14 Now, the second thing is that, is this a taking?
15 I think this is going to be before the judges, folks. You
16 -- I've never seen a people more put out than this group
17 to come before you today. We hear about catalytic
18 converters and everything. But remember, the old cars
19 were grandfathered in and just the new ones came in. This
20 is much different. And when I go back to my Board,
21 they're going to be very upset, folks, and I think there
22 ought to be a cooling down period. I just went out there
23 during the break and I joined stopwork.org, and I hope
24 everybody does and I hope these people organize. You're
25 taking on the wrong group. These are people of means, and
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1 they aren't going to just lay down and go out of business
2 and go bankrupt. They're not going to do that.
3 So I -- you need a fresh look at the economics of
4 this. Can these people stay in business and implement
5 your thing? If they can't, it is confiscatory, and we're
6 in a collision course between the taxpayers of this state
7 and your Board.
8 All right? I'm sorry to bring you that news, but
9 that's about what it is. Thank you.
10 CHAIRPERSON NICHOLS: Okay. Thank you for your
11 comment.
12 Alex Kelter, Dr. Keller, followed by Martin
13 Lassen, followed by James Atkins.
14 DR. KELTER: Thank you, Madam Chair and members
15 of the Board. My name is Alex Kelter. I'm a physician
16 and epidemiologist, just retired from 24 years in the
17 state health department. I'm here today because of my
18 affiliation with the American Lung Association and the
19 Sierra Sacramento Valley Medical Society, both of whom
20 signed a letter to the Board, which I believe is in the
21 record, urging the adoption of a very strong regulation to
22 protect public health.
23 At this time of the day, I'm not going to repeat
24 a bunch of testimony about what the health effects are of
25 toxic air contaminants, criteria pollutants and particles.
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1 But what does give me a sense of urgency about,
2 particularly the construction equipment regulations, has
3 to do with what I see as the changing pattern of
4 development for the next century. Unlike the experience
5 of the past century, almost, ultimately almost all new
6 development in California will wind up occurring where
7 there is already development. So that means construction
8 equipment is going to be much more proximal to vulnerable
9 populations than ever before.
10 As we urge that farmland and habitat be preserved
11 and that we try to find homes and businesses and schools
12 and workplaces for 36 million more Californians by 2060,
13 the requirements to do that and still improve our
14 environmental footprint means that virtually all new
15 development will some day have to occur where there is
16 already development. And so that means under our very
17 noses. It means next door to hospitals, nursing homes,
18 child care centers and schools, churches, businesses,
19 offices, gymnasia, et cetera. Not out in the middle of a
20 cotton field.
21 So these emissions will not just be averaged over
22 air basins, but there will be hot spots. And as this
23 pattern of development continues, it increases the sense
24 of urgency I have to assure that this construction
25 equipment is as clean as possible to protect public
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1 health.
2 Thank you.
3 CHAIRPERSON NICHOLS: Thank you, Dr. Kelter.
4 Thanks for sticking with us.
5 Martin Lassen, followed by James Atkins, and
6 Rafael Aguilera.
7 MR. LASSEN: Good afternoon, Madam Chair and
8 members of the Board. My name is Marty Lassen, and I'm
9 the Director for Commercial Development for Johnson
10 Matthey's Heavy Duty Diesel Group. I want to thank you
11 for the opportunity to make comments on this rule.
12 Johnson Matthey is a technology company that has
13 been providing advanced catalytic solutions to reduce
14 emissions for over 30 years. We worked with both ARB and
15 the EPA to provide new technology to reduce emissions from
16 both mobile and stationary sources. Johnson Matthey fully
17 supports your goals in the diesel risk reduction program.
18 Johnson Matthey has existing business
19 relationships with a number of North American engine OEs.
20 We're a major suppliers of emission control technology for
21 EPA's 2007 on-road rule and we are working with the engine
22 OEs for the second phase for 2010. At the same time,
23 we're working with a number of non-road OEs, both engine
24 and machine manufacturers, to provide technology for the
25 EPA's non-road rule coming effective for Tier 4 engines.
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1 With regard to retrofit, Johnson Matthey
2 technology has been verified by both ARB and the EPA for
3 on-road engines. Additionally, Johnson Matthey technology
4 has approval from a number of other governmental bodies in
5 both Europe and the Far East. And this is both for
6 on-road engines as well as non-road engines. In fact,
7 we've retrofitted over 150,000 vehicles over the last
8 20 years.
9 Johnson Matthey has several verification
10 applications in place with ARB for technology that reduces
11 both PM and NOx from non-road machines. We recognize that
12 non-road applications are not the same as on-road
13 applications. Do we think retrofitting non-road vehicles
14 will be easy and straightforward? Maybe it will be easy
15 on some applications, but certainly not on all
16 applications. There is no doubt that special attention
17 will be have to be paid to such things as duty cycles,
18 space constraints, line of sight safety, vibration, and
19 other issues specific to non-road machines. And in some
20 cases, we may not be able to retrofit machines at all.
21 We know that uncertainty is not a good thing for
22 business. My business or the businesses that are
23 represented here. However, we are confident that with a
24 targeted effort, smart engineering, and the right
25 technology, there will be solutions for non-road
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1 retrofits.
2 Thank you.
3 CHAIRPERSON NICHOLS: Thank you.
4 BOARD MEMBER RIORDAN: May I ask just a quick
5 question, Madam Chair?
6 CHAIRPERSON NICHOLS: Yes, please.
7 BOARD MEMBER RIORDAN: Your verifications, are
8 they in progress right now with us?
9 MR. LASSEN: Yes, Ms. Riordan, they are, for both
10 NOx and PM.
11 BOARD MEMBER RIORDAN: Great. 'Cause obviously
12 you've heard today, and I hope you can take back to your
13 company, that there is real strong desire to have some,
14 you know, equipment available to some of these companies
15 almost immediately.
16 MR. LASSEN: Absolutely. And with the certainty
17 of this rule in place, the business case is there to do
18 that. So thank you.
19 BOARD MEMBER RIORDAN: Great. Thank you.
20 CHAIRPERSON NICHOLS: James Atkins, Rafael
21 Aguilera, Don Anair will be following them.
22 MR. ATKINS: I'm James Atkins with Cobra
23 Equipment Rental Company. I'm born and raised in
24 California. We have a small family-size business. We
25 have 20 machines, but they're all twin engine scrapers.
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1 We have a total of 19,000 horsepower. So, therefore,
2 we're lumped into the group of large, and I don't really
3 think that's fair. Being a rental company, we gross about
4 five to five and a half million dollars a year. I just
5 received some Carl Moyer funds. It's going to cost $1.7
6 million to repower 25 percent of our machines. So I don't
7 know how adding one percent is going to cover our cost.
8 We're -- I guess, we'll miss the horsepower
9 limits for the SOON program, so we kind of fit in the
10 middle there. And I really think the rental companies are
11 getting the short end of this deal, because we can't --
12 you know, we can't add on to our bids. We're just stuck
13 with our base rental base.
14 As far as the V-dex go, on the Tier 3 motors,
15 it's $88,000 for the HUSS system for one machine, for four
16 mufflers. And that's going to cost $5 an hour to maintain
17 the mufflers, also.
18 The Tier 0, someone was asking about that and
19 I've checked. It's going take a total of six mufflers to
20 put on our Tier 0 scrapers for a cost of over $120,000.
21 So I'm asking you to put this off so we can get
22 some more Moyer funding. You know, otherwise, our only
23 business plan is to, to be honest with you, is to start
24 phasing out of state. I mean, there's no way that, you
25 know, the numbers that you guys have come up with
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1 represent us.
2 Thank you.
3 CHAIRPERSON NICHOLS: Thank you for staying and
4 for giving your testimony.
5 We'll hear from Rafael Aguilera, if you're here,
6 and then Don Anair, Henry Hugo.
7 MR. AGUILERA: Good afternoon, Chairwoman Nichols
8 and Board members. First like to say welcome to
9 Ms. Nichols and look forward to working with you on this
10 and many other things at the ARB.
11 My name is Rafael Aguilera. I'm a consultant,
12 but today I'm here in my capacity as a Sierra Club member
13 and representing Sierra Club California.
14 Just wanted to make some brief comments. I think
15 a lot has been said today. You know, this rule is very
16 important, because it will address significant public
17 health issues in the Central Valley and the San Joaquin.
18 The analysis states that it would benefit the residents to
19 the tune of 18 to $26 billion in public health benefits.
20 Given the ongoing research on super fine
21 particles, I'd like to assert that the benefits would
22 probably even amount to even greater than what they've
23 projected.
24 Also want to say it's a very good reg because
25 it's complementary to clean construction requirements that
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1 would, hopefully, stay on the table in the budget
2 negotiations that are going on over at transportation,
3 dollars that would be spent. We feel it's complementary.
4 Also want to urge you to take a step further and
5 include the opt-in program for other districts so that
6 they might also take advantage of this program.
7 And I mean, in closing, we just wanted to say
8 that this is very important because without this rule
9 South Coast and the Central Valley will be hard pressed to
10 actually attain ambient air quality standards. We agree
11 with Chairwoman Nichols saying that, you know, we have to
12 move quicker, not slower, and the Governor, that we have
13 to clean up the Central Valley quicker as well. And we
14 urge you to put this proposal into action.
15 Thanks.
16 CHAIRPERSON NICHOLS: Thank you very much.
17 Don Anair. The last scheduled witness was Henry
18 Hugo from the South Coast AQMD, but we do have one sort of
19 anomalous situation, somebody who wasn't here asked to be
20 represented by another person who is here. So Doug Jeffe,
21 are you going to want to testify?
22 MR. JEFFE: Briefly.
23 CHAIRPERSON NICHOLS: All right. Well, then, you
24 can follow Mr. Anair and then we'll hear last from the
25 South Coast District. I think that's fair. Okay.
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1 MR. ANAIR: Okay. Thank you. Good afternoon.
2 It's been a long day. My name is Don Anair. I'm a
3 vehicles analyst with the Union of Concerned Scientist.
4 And as you heard previously from Kate Lefkowitz, my
5 colleague, we are in strong support of this regulation.
6 She also made comments in support of the opt-in program
7 with South Coast, San Joaquin Valley. And the fact that
8 we would like it opened to other air districts. And also
9 rejecting the notion of a three-year compliance window for
10 these companies. We think that the -- we don't disagree
11 with the flexibility. We do disagree with losing health
12 benefits. And I'll talk a little bit about that more in a
13 minute.
14 We've also submitted comments twice now with over
15 20 health organizations, community organizations,
16 environmental groups, science based groups, who are in
17 support of this regulation and in support of clean air.
18 We've also attached a long with our comments editorials
19 from major newspapers around the state, Bakersfield, L.A.,
20 Sacramento, San Francisco, San Bernardino, in support of
21 this regulation. Everyone knows that this equipment needs
22 to be cleaned up. In fact, just today when I was driving
23 up here, heard on the radio, the Public Policy Institute
24 of California recently released their, today, released
25 their survey results of their annual survey of
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1 Californians. Sixty-eight percent of Californians support
2 stronger environmental standards. Even if they raise the
3 cost of doing business in California. I just want to put
4 that out there. It reaffirms California's strong will for
5 clean air and a healthy environment.
6 Now, I'd like to talk just briefly about the
7 implications of the three-year extension deadline.
8 Basically, it would provide more flexibility. But it does
9 come at a high cost. And that cost is reduction in
10 benefits of particulate matter and nitrogen oxide
11 emissions and those happen throughout the state.
12 And I want to prevent sort of this becoming a
13 false choice between an opt-in program that would use
14 incentive funding to get additional NOx reductions in
15 certain areas of the state, and trading that off for
16 direct toxic PM emission reductions that occur throughout
17 the state and they're local pollutant -- it's a local
18 pollutant. These are pollutants that are in communities.
19 People who live near construction sites are affected by
20 these. It's not just a 70-year cancer risk. There are
21 direct short-term effects of particulate matter.
22 And I think just, in your deliberation today,
23 just to keep that in mind. It's a false choice the
24 tradeoff the health benefits from an opt-in program with
25 moneys that essentially, they're essentially Moyer moneys,
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1 they would be used to fund other projects if they weren't
2 being used to fund these construction projects. They're
3 not necessarily additional reductions beyond what we would
4 get from an incentive program.
5 I agree with the program, because it does require
6 companies to use the incentive funds. And it will result
7 in emission reductions. I just don't think the tradeoff
8 for direct PM reductions into other parts of the state
9 should be compromised to do that.
10 And I know I'm running short on time here. I
11 just want to reiterate a point that was made earlier today
12 about the language and how it's presented and the option
13 of other states adopting California's regulations. This
14 is critical. I think it's a small change. Staff has
15 looked at it. If that could be included in the 15-day
16 change, be very supportive of that.
17 CHAIRPERSON NICHOLS: You are out of time.
18 MR. AGUILERA: And just, just finally, I want to
19 thank the staff for their dedication and commitment over
20 the last three years. And also to congratulate Tony on
21 his new arrivals.
22 CHAIRPERSON NICHOLS: Okay. Thank you. I think
23 we're going to have do pin-ups of our staff pretty soon.
24 Okay. Doug, why don't you just come forward.
25 MR. JEFFE: I'm Doug Jeffe representing
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1 Transportation California. And Mark Watts, the executive
2 director sends his apologies, but he's being held prisoner
3 in the Capitol trying to salvage transit moneys.
4 Transportation California is a coalition of
5 business, labor, transportation agencies, automobile
6 clubs, and other members of the transportation community
7 whose mission is to fight for more money for
8 transportation infrastructure. Proposition 1B was one of
9 the major points in Transportation California's platform,
10 if you will, and as you know, it was overwhelmingly passed
11 by the voters.
12 A major purpose, priority purpose of Proposition
13 1B was to improve air quality through relief of traffic
14 congestion, funding of transit, and measures to reduce
15 emissions from goods movement activity. This rule will
16 come into play probably in exactly the wrong time in terms
17 of when the Proposition 1B moneys are being ramped up,
18 when equipment is needed, when contractors are needed.
19 There seems to be a pretty uniform consensus
20 within the transportation community that adequate
21 technology and equipment resources for retrofit are not
22 likely to be there within the next two years. If that
23 happens and equipment is pulled out and contractors are
24 forced to pull back from projects, there are a lot of
25 projects that will benefit air quality that will be
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1 undermined and delayed. So that in considering your
2 action in the implementation schedule of this, please
3 consider that there are other air quality ramifications
4 that should be taken into amount. Thank you.
5 CHAIRPERSON NICHOLS: Thank you.
6 And now we'll hear from Henry Hogo from the South
7 Coast Air Quality Management District. And Henry, you're
8 going to get the same three minutes that everybody else
9 does.
10 (Thereupon an overhead presentation was
11 presented as follows.)
12 MR. HOGO: Thank you, Madam Chair, and members of
13 the Board.
14 --o0o--
15 MR. HOGO: For the record, I'm Henry Hogo with
16 the South Coast Air Quality Management District.
17 My comments are limited to the SOON proposal
18 before you today. And the South Coast staff have had a
19 chance to actually put the provisions -- the proposed
20 provisions into the regulatory model that your staff is
21 using to estimate the benefits of the program.
22 --o0o--
23 MR. HOGO: Thank you. This slide shows the
24 nitrogen oxide benefits of having a SOON Program as well
25 as the proposed statewide regulation. We consider these
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1 two to be together, not a separate entity of each other.
2 So when we look at the total nitrogen oxide emission
3 benefits, you'll see it actually adds up to almost double
4 to what the statewide program would get. So we're looking
5 in the South Coast at one program that has the statewide
6 element in it and the SOON element in it.
7 What we found in addition to that if we go to the
8 next slide --
9 --o0o--
10 MR. HOGO: -- the benefits of the SOON Program
11 actually cross over into the PM side. As you can see
12 here, the dotted line in green shows a greater PM emission
13 reductions compared to if there were no SOON Program in
14 place in the South Coast. And this actually goes over
15 multiple years all the way out to 2020. So there is some
16 benefits. And it's the way the provisions are written in
17 the SOON Program that gives this greater benefit.
18 Next slide.
19 --o0o--
20 MR. HOGO: Such as was mentioned earlier by our
21 Governing Board Member Dr. Lyou, that our Governing Board
22 Administrative Committee is looking at putting forward
23 $120 million over the next four years to help out with
24 this program.
25 --o0o--
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1 MR. HOGO: We do have some proposed minor
2 revisions to the language that staff has offered in
3 Attachment 1. The first being Section 2449.1(d)(2) that
4 we wanted to clarify the cost effectiveness calculation
5 that we want to ensure that to get the 12 tons reduction
6 mentioned, that we look at the most cost effective
7 projects first. So we would want applicants to submit the
8 most cost effective projects under $5,000 per ton or
9 better. And if the project applicant did not have any
10 projects like that, then we would except all the other
11 projects, but in cost effective order.
12 Next slide.
13 --o0o--
14 MR. HOGO: And then we wanted to offer some
15 language. And it's suggested addition to Attachment 1
16 relative to this three-year target. As proposed in the
17 SOON Program, we have three-year milestones. We believe
18 that for nitrogen oxide that districts under the SOON
19 Program could have three-year milestones for nitrogen
20 oxides. And as such, we have suggested language in how
21 that could work relative to the statewide program. That's
22 Section 2449, which is Table 1 that shows the NOx targets.
23 Instead of meeting NOx targets every year, it would be met
24 on a triennial basis.
25 However, we do want to keep the PM NOx targets on
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1 an annual basis. It's very important the way the model
2 works and the way we evaluated the SOON Program, it is
3 assuming that the PM is NOx -- PM targets on an annual
4 basis. So we do not want to see that change. But we are
5 proposing that your Board consider the flexibility of
6 allowing the NOx targets to be three years.
7 CHAIRPERSON NICHOLS: Have you done a calculation
8 on what loss of control that gets you going from one to
9 three years under this program?
10 MR. HOGO: We believe you wouldn't lose much.
11 Because under the SOON Program, the Executive Officer has
12 the ability to require compliance plans. And we believe
13 the compliance plans, the way for fleets to identify
14 either yearly basis, over the three years, how are they
15 going to meet the Base Statewide Program and how they're
16 going to meet the SOON Program.
17 CHAIRPERSON NICHOLS: So you're going to take on
18 the job of reviewing every fleet's annual compliance
19 program or compliance program administratively under this
20 opt-in program?
21 MR. HOGO: At this point, because the fact that
22 we actually will be implementing the funding programs, we
23 do have that reporting provision in the SOON Program. In
24 addition, the Executive Officer can, as stated in one of
25 the provisions that may require compliance plans.
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1 So we believe working with your staff we can run
2 this program fairly efficiently. Not only that, the
3 fleets have the flexibility of identifying over a
4 three-year period what they're going to do with each of
5 their vehicle or equipment in order to meet these targets.
6 BOARD MEMBER LOVERIDGE: Mary, can I ask staff to
7 comment on both the revision and the addition to the
8 language that --
9 CHAIRPERSON NICHOLS: Sure. We can do that at
10 this point if you'd like.
11 Is that the conclusion of your testimony?
12 MR. HOGO: My last slide is to urge you to adopt
13 the SOON Program.
14 CHAIRPERSON NICHOLS: Thank you. I thought it
15 was.
16 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
17 WHITE: I think from the staff perspective, I'll speak to
18 the first suggested amendment in regards to changes
19 relative to the cost effectiveness.
20 In conversations we've had with the district, we
21 indicated that it made sense to have some flexibility
22 around that as time went on in case some changes to that
23 number were necessary, since it is hard written into the
24 regulation. I think that makes some sense. So we will
25 take a look at that and see if that's the appropriate
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1 language. But I think in concept that certainly has some
2 merit to have in there.
3 BOARD MEMBER LOVERIDGE: And this addition.
4 CHAIRPERSON NICHOLS: And this addition of the
5 three-year averaging provision for South Coast or whoever
6 opts in.
7 ACTING EXECUTIVE OFFICER CACKETTE: Well, I think
8 our first read on this is that that language would impose
9 triennial compliance intervals on the ARB Base Plan for
10 NOx as well as on the SOON Program. And so we have this
11 sort of mixed thing. And we have some analysis to I think
12 help you address this issue of intervals if you get to
13 that point. So maybe we could just leave this as sort of
14 contingent right now.
15 CHAIRPERSON NICHOLS: We'll close the hearing and
16 move on to the discussion.
17 ACTING EXECUTIVE OFFICER CACKETTE: I don't think
18 we should have any problem with it in the SOON Program
19 itself. It's when we get down into the Base Program I
20 think there's some choices to be made.
21 CHAIRPERSON NICHOLS: Okay. If it's okay, let's
22 proceed to make sure I'm correct that we have gone through
23 our list.
24 MR. HOGO: Madam Chair, we're not recommending
25 that outside of the SOON Program.
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1 CHAIRPERSON NICHOLS: Yes. Understood. But I'm
2 not sure it can be implemented that way, was the issue as
3 I understood what Mr. Cackette was saying.
4 ACTING EXECUTIVE OFFICER CACKETTE: I was saying
5 I think the language perhaps --
6 CHAIRPERSON NICHOLS: It's a language issue.
7 ACTING EXECUTIVE OFFICER CACKETTE: -- does that.
8 CHAIRPERSON NICHOLS: Okay. All right. We
9 understand that's not your intent.
10 MR. HOGO: Thank you.
11 CHAIRPERSON NICHOLS: All right. At this point,
12 we are going to conclude the public hearing and move on to
13 discussion of the Board and final action on this matter
14 that's before us.
15 Before we do that, I think the Board members are
16 required to disclose any ex parte communications that they
17 may have had. I think we'll start down on the other end
18 from where we did this morning. We'll start with you,
19 Supervisor Roberts.
20 BOARD MEMBER ROBERTS: Thank you.
21 On April 4th, I met with Building Industry
22 Association Officials San Diego County. And participating
23 in that meeting were Mike Reynolds, Paul Trayon, Mike Shaw
24 and Scott Molloy. And the conversation involved staff
25 proposals including availability of engines in the new
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1 tiers, repowering issues, and similar issues on the lines
2 of the testimony that we heard in May.
3 On April 5th, I met with the Associated General
4 Contractors of San Diego. And participating in that
5 meeting were John Dunlap, Mike Shaw, Mike Carcioppolo.
6 I'll give you the spelling of that. And --
7 CHAIRPERSON NICHOLS: This will go in writing
8 anyway.
9 BOARD MEMBER ROBERTS: The items covered were
10 cost and implementation schedules, distribution of engine
11 types, assembly line supply issues, warrantee issues,
12 repowering issues, possible solutions focused on time
13 lines, advantage of new credit for changes of engine
14 fleet, changes of Carl Moyer program, and other similar
15 program.
16 And on April 11th, I had a conference call with
17 the National Electrical Contractor's Association. And
18 participating in that along with staff member Gary Rotto,
19 Karen Prescott from the NECA, and Andre Berg from NECA.
20 And the discussion was about the provisions of the
21 proposed regulations that focused on the impact of the
22 regulations on the evaluation of the on-road diesel
23 equipment and that subsequent impact on a company's
24 bonding capacity.
25 On May 17th, there was a conference call with
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1 Bonnie Holmes-Gen, the American Lung Association, and Don
2 Anair of the Union of Concerned Scientists. Gary Ratto of
3 my staff also participated in that. And that conversation
4 was about a number of things, including postcards from San
5 Diegans advocating for approvals of the rules, a study
6 conducted by UCS demonstrated health impacts. We
7 discussed the need for regulations and agreed that science
8 supported that we need. Talked about the time lines for
9 adoption. Touched on the economic impacts and analysis.
10 Talked about Tier 4 engines not required in the near
11 future. Discussed the NOx reduction proposal, its effect
12 on South Coast and the San Joaquin Air Districts and
13 whether NOx reductions could go further. Discussed the
14 reasoning for fleet average versus equipment requirements.
15 Discussed whether regulations should have a section on
16 sensitive sites near construction sites. Discussed the
17 possible need for a sunsetting of the low use exemption.
18 And discussed the increased enforcement of the diesel
19 control measure to assure that parties affected are in
20 compliance.
21 On July 12th, I again met with the AGC,
22 Associated General Contractors of San Diego. Brad Barnum
23 Bar and Jim Ryan of AGC and Mike Furby of Marathon
24 Construction were in the meeting with a discussion of the
25 CIAQC proposal, including maintaining period goals while
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1 creating flexibility on an annual basis and goals for
2 2025. Gary Ratto of my staff was also in that meeting.
3 On July 17th, there was a call with Don Anair,
4 Union of Concerned Scientists, and Kathryn Phillips with
5 Environmental Defense. Gary Ratto of my staff
6 participated in that. And that concerned the new staff
7 proposals and the dates of compliance. And I think
8 generally the conversation was along the lines of their
9 presentation here today.
10 That does it.
11 CHAIRPERSON NICHOLS: Okay.
12 BOARD MEMBER LOVERIDGE: Supervisor Roberts said
13 he'd be brief. I will be briefer.
14 May 21st, a condition conference call with Don
15 Anair and Joe Lyou.
16 Phone call on July 19th with Don Anair.
17 Phone call yesterday from Mike Duval.
18 Sorted conversations with Barry Wallerstein. All
19 comments are sort of consistent related to what we heard
20 today.
21 CHAIRPERSON NICHOLS: Thank you.
22 BOARD MEMBER SPERLING: May 3rd, I met in Davis
23 with Kathryn Phillips, Environmental Defense; Diane
24 Bailey, NRDC; and Don Anair regarding the testimony
25 they've presented today, the same issues.
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1 July 12th, with Jane Lea representing Job Corp.
2 And her concerns have been dealt with by the staff
3 proposal I understand.
4 Conference call with Diane Bailey, NRDC; Don
5 Anair, Union of Concerned Scientists on July 18th
6 regarding their testimony. The same issues that
7 Supervisor Roberts described.
8 And July 18th, a call with John Dunlap and Mike
9 Lewis about the issues that were much discussed today.
10 BOARD MEMBER RIORDAN: Madam Chair, on the 24th
11 of April and July 25th, I met with Kathryn Phillips from
12 Environmental Defense here at the Air Resources Board in
13 Sacramento. Much of our discussion mirrored her testimony
14 today.
15 In April, I met with Steven Matich, Matich
16 Construction, and Mike Lewis from CIAQC regarding the
17 request for flexibility for this rule.
18 On May 9th and July 6th, I met with John Dunlap
19 and Mike Lewis again with CIAQC representing CIAQC, and in
20 El Monte once and in Redlands the other time. And very
21 much mirrored their request for flexibility.
22 And on May 29th, I received a call from Larry
23 Jacinto, Larry Jacinto Construction. And that led to a
24 meeting with staff on July 3rd where we visited the
25 construction company and looked at their equipment
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1 records. And we met with Larry Jacinto, owner; Eric
2 Nixon, Executive Vice President; Doug Straw, equipment
3 manager; and Steve Hopkins, who is the financial officer
4 for that company.
5 On June 20th, I met with Dave Porcher and Shane
6 Gara of Camarillo Engineering in Los Angeles prior to our
7 meeting there in Los Angeles as I say on June 20th. Much
8 of their comments mirrored their testimony today.
9 I met on July 5th in Redlands with Mr. and
10 Ms. Gordon Downs of Downs Equipment Rental. And what we
11 spoke about was mirrored in Mr. Down's testimony today.
12 Received on July 15th a call from Steven Matich,
13 Matich Construction regarding the workshop on July 16th.
14 And on July 16th, I spoke to Tom Aja and Tom
15 Prescott, Operating Engineers Local District 3 regarding
16 the apprentice program and the Jobs Corps. program which
17 we have discussed. And we have essentially taken care of
18 their issue.
19 On July 23rd, had a call from John Dunlap and Bob
20 Roberts representing the California Ski Industry. And I
21 think those issues were well represented in the testimony
22 today. And response from staff seems to have alleviated
23 their concerns.
24 And on July 25th, I had a field trip to the
25 Sacramento Landfill to view retrofitted equipment that was
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1 operating there. The tour essentially was sort of led by
2 Rick Jesse from Cummins/West and Steven Utterback from the
3 landfill staff.
4 And on July 25th, I had a follow-up call from
5 John Dunlap regarding CIAQC's response to final staff
6 report.
7 That concludes mine.
8 CHAIRPERSON NICHOLS: Thank you. I feel like a
9 relative slacker in terms of my communications.
10 I do want to -- in case anybody in the audience
11 is wondering why we're doing this. The Board members are
12 not only permitted, they're actually encouraged to
13 communicate with people about rulemakings outside of Board
14 proceedings. But when we do have such contacts, we have
15 to disclose the names of the people that we had contact
16 with and the general content of those communications for
17 the record.
18 And this is really designed so that once there's
19 been a notice of a hearing and we're moving forward on a
20 regulation, the public is entitled to know what the Board
21 is hearing and to have a fair understanding of why we're
22 making the decisions that we're making. So that's the
23 purpose of all of this disclosure.
24 I had two meetings, both on July the 11th. One
25 was with representatives of the environmental community,
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1 Kathryn Phillips of Environmental Defense; Diane Bailey of
2 NRDC; Bonnie Holmes-Gen of the American Lung Association;
3 and Don Anair from the Union of Concerned Scientists all
4 came in and expressed their concerns about the rule, the
5 same comments they made here.
6 And that same day, I also met with John Dunlap
7 and Mike Lewis regarding the CIAQC proposal. And again I
8 think the substance of that has been fully aired here
9 today.
10 BOARD MEMBER D'ADAMO: On April 24th, I met with
11 Bonnie Holmes-Gen, American Lung Association; and Kathryn
12 Phillips with Environmental Defense here in Sacramento.
13 On May 9th, met in my Stockton office with Dr.
14 Barry Wallerstein with South Coast.
15 On May 9th, conference call with John Dunlap and
16 Mike Lewis representing the CIAQC.
17 On May 9th, I met in my Merced office with Mr.
18 and Mrs. Gordon Downs.
19 July 12th, conference call with John Dunlap and
20 Mike Lewis again representing CIAQC.
21 July 12th, meeting in my Merced office with Tom
22 Aja and Tom Prescott representing the Operating Engineers
23 Local District Number 3.
24 July 18th, conversation with Kathryn Philips
25 while we were both in Washington, D.C.
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1 On July 20th, a phone conversation with Sayed
2 Sadredin with the San Joaquin Valley Air Pollution Control
3 District.
4 On July 24th, meeting in my Modesto office with
5 Dave Porcher, Camarillo Engineering.
6 On July 24th, meeting in Modesto with Mike
7 Spencer representing Job Corp.
8 July 25th, telephone conversation with Robin
9 Adam, Chief of Staff to Assemblywoman Galgiani.
10 And today, July 26th, conversation with John
11 Dunlap.
12 All of these conversations are consistent with
13 testimony presented today. But I will note Robin Adam
14 representing Assemblywoman Galgiani did not present
15 testimony. So I will just specifically note that in that
16 conversation he had many general questions about the
17 proposal and expressed concerns regarding economic impact.
18 CHAIRPERSON NICHOLS: Thank you.
19 BOARD MEMBER CASE: Madam Chairman, when you
20 referenced being a slacker, I think I have a shorter list.
21 Part trying to balance my newness to this Committee as
22 well as being a County Supervisor with the challenging
23 budget.
24 But on June 20th, I did meet in Los Angeles with
25 Dave Porcher and Shane Gara of Camarillo Engineering.
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1 That was immediately prior to the ARB meeting at the
2 Marriott Hotel in Los Angeles.
3 And today, I spoke briefly at our lunch break
4 with Dr. Gordon Downs in regards to clarifications of his
5 testimony that we all received today. Thank you.
6 SUPERVISOR HILL: Thank you, Madam Chair.
7 On May 11th, I met in Redwood City with the
8 Engineering and Utility Contractor's Association. And the
9 attendees were Tara Haas, Director of Government
10 Relations; Ron Smith, Shop Supervisor for North Bay
11 Construction; Mitchell Hanner, Resource Manager for
12 McQuire Hester; Gregg Oxley, Allen Waggoner Construction.
13 May 17th, met in Redwood City with Dr. Barry
14 Wallerstein, Executive Officer of the South Coast AQMD.
15 May 17th, met with Mr. and Mrs. Gordon Downs,
16 Downs Equipment Rentals in Bakersfield.
17 May 18th and July 25th, phone calls with Diane
18 Bailey, NRDC.
19 July 5th, met in Redwood with Jane Lea with Job
20 Corp. And the discussions and conversations all mirrored
21 the testimony they all gave today and they gave in May in
22 San Diego.
23 BOARD MEMBER BERG: On May 1st, I met at South
24 Coast Air Quality Management District in Diamond Bar with
25 Dr. Barry Wallerstein, Executive Officer of South Coast
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1 Air Quality Management District.
2 On May 10th, in a meeting at Ellis Paint Company,
3 I met with Bonnie Holmes-Gen, American Lung Association;
4 and Diane Bailey, NRDC, joined the meeting via telephone.
5 On May 10th, I had a meeting at Ellis Paint
6 Company with John Dunlap and Mike Lewis with the
7 Construction Industry Air Quality Coalition.
8 On May 22nd, I had a meeting at Ellis Paint
9 Company with Mr. and Mrs. Gordon Downs, owner of Downs
10 Equipment Rental.
11 On May 22nd, I had a meeting at Ellis Paint
12 Company with Doug Jeffe of Granite Construction.
13 On June 13th, I had an on-site visit at Downs
14 Equipment Rental in Bakersfield. And present at that
15 meeting was Gordon Downs, Joyce Downs, Brent Downs, and
16 the ARB staff.
17 On June 14, I had a side bar discussion in Fresno
18 with Construction Industry representatives Bill Davis and
19 Mike Lewis of the Construction Industry Air Quality
20 Coalition.
21 On July 3rd, I had an on-site visit with fellow
22 Board Member Barbara Riordan at Larry Jacinto
23 Construction. And present at that meeting was Larry
24 Jacinto, President and Owner; Eric Nixon, Executive Vice
25 President; Doug Straw, Equipment Manager; Steve Hopkins,
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1 CFO; and the ARB staff.
2 On July 5th, had a meeting at Ellis Paint Company
3 with Kevin O'Bryant, the regional coordinator of Job Corp.
4 On July 6th, I had a meeting at Ellis Paint
5 Company with John Dunlap; John Hakel, VM, Government
6 Relations with Associated General Contractors of
7 California; Clayton Miller, Construction Industry Air
8 Quality Coalition; Bill Davis, Executive Director of the
9 Southern California Contractors Association; and Richard
10 Paine, Executive Director of the Engineering Contractor's
11 Association.
12 On July 13th, I had a conference call with Guy
13 Preston, Director of Safety; and Tom Aja, both of the
14 Operating Engineers Local District 3.
15 On July 19th, I had a meeting at Ellis Paint
16 Company with Dave Porcher, Equipment Superintendent for
17 Camarillo Engineering, and Shane Gara also of Camarillo
18 Engineering.
19 On July 23rd and 24th, I had follow-up phone
20 calls with Diane Bailey from the NRDC, and Bonnie
21 Holmes-Gen, American Lung Association.
22 On July 24th, I had a follow-up phone call with
23 Guy Prescott, Operating Engineers Local District 3.
24 I had a follow-up phone call with George Bragg,
25 President of Bragg Crane in Long Beach. Because Mr. Bragg
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1 had not testified today, our conversation revolved around
2 current status of the regulation and the fact that we were
3 going to cover cranes in the upcoming on-road regulation.
4 On July 25th, I had a follow-up phone call with
5 Doug Straw, Equipment Manager from Jacinto Construction,
6 although I put a call into him and he did not respond. So
7 please strike that on July 25th, because I didn't have
8 that follow-up phone call.
9 On July 25th, I had a field trip with ARB staff
10 to the Sacramento County Landfill to review retrofit
11 equipment and operation. The tour was led by Rick Jesse,
12 the Cummins/west coast sales manager.
13 During the month of June and July, I called the
14 following banking experts to understand the financial and
15 banking implications of asset to debt ratio and capital to
16 debt ratio: Klaus Schilling, Executive Vice President of
17 First Regional Bank of Los Angeles; and Jane Netherton,
18 President of the International City Bank of Long Beach.
19 I had several follow-up conversations and
20 correspondence during the month of June and July with
21 Gordon and Brent Downs and the ARB staff reviewing the
22 regulation and documents to understand the financial
23 implication of repowering and retrofits.
24 I had the following follow-up conversations with
25 Dave Porcher of Camarillo Engineering to understand the
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1 interpretation of the regulations for Tier 0, turnover,
2 and Tier 1 credits as referred to on page A 18 of the
3 regulation.
4 I had follow-up conversation with John Dunlap
5 yesterday on July 25th and a side bar conversation this
6 morning on the 26th.
7 And also had a follow-up conversation this
8 morning with Brent Downs, Downs Equipment on July 26th.
9 Thank you, Madam Chair.
10 CHAIRPERSON NICHOLS: Are you sure that's all you
11 did?
12 BOARD MEMBER BERG: Yes. And my father would
13 like to know when I'm coming back to work.
14 SUPERVISOR HILL: I was waiting to see if she
15 would beat Ron.
16 CHAIRPERSON NICHOLS: It's an impressive list,
17 folks. And it's really a sign people have been doing
18 their homework.
19 I want to make it clear at this point we have
20 closed the record for this agenda item, and we're going to
21 proceed to a discussion now on the proposed regulation.
22 And when we do that, we will not be taking further
23 testimony.
24 If the Board wishes to make changes to the
25 regulation that was presented by staff, we can direct that
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1 changes be made within the scope of a notice that was put
2 out originally so that what might appear would not
3 necessarily be exactly what was proposed, as long as it's
4 within that general area.
5 But regardless of what we do, there will be a
6 period after the action when there will be a 15-day notice
7 and there will be additional opportunity for comment on
8 whatever it is that we change, which would be written
9 comment only. There won't be any further public meetings
10 of the Board at this point.
11 But any of the comments that would be received
12 during that final period would be considered and responded
13 to in writing as part of the final Statement of Reasons
14 supporting the regulation as it finally comes out of this
15 process. So that's the way that we're going to proceed.
16 I made a list as we were going through. And it
17 may not be complete, but I want to mention the items as we
18 go forward.
19 But I think before I do that, I'd first like to
20 have a motion and second on the proposed regulation and
21 then we can enter into some further discussion.
22 BOARD MEMBER D'ADAMO: I'd be prepared to make a
23 motion that we adopt Resolution Number 07-19.
24 BOARD MEMBER LOVERIDGE: Second.
25 CHAIRPERSON NICHOLS: And we have a second from
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1 Mayor Loveridge.
2 Okay. I'd like to say before I mention some of
3 the items that I think the Board may want to consider
4 before we finally vote on this regulation that, as most of
5 you know, I was on this Board about 30 years ago. It's
6 been a long time since I've been in a hearing that began
7 at 9:00 and didn't conclude until after 5 o'clock. And I
8 guess I'm pleased to know I can still do it. That's good
9 to find out.
10 But in some ways I feel as though I never left.
11 And I think that's partly because we're really breaking
12 new ground here with this proposed regulation.
13 I know it has taken a long time to get to the
14 Board. People talked about three years in which it was
15 under preparation. Some would argue it was longer than
16 that, when it should have been brought forward and wasn't
17 able to be brought forward. And I think there's an
18 important reason for that. And some of the testimony that
19 we've heard today indicates why that is.
20 And the fact is that although we're dealing with
21 pollutants that everyone acknowledges are of grave concern
22 from a health perspective, particulates and NOx, everyone
23 agrees that the industry we're talking to here and about
24 is a major source of emissions of those pollutants. It is
25 a diverse, complex industry characterized by many small
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1 businesses as well as some very large businesses, people
2 who are in the rental business, people who mine, people
3 who do all different types of construction.
4 And it hasn't been an easy task to come up with a
5 proposal that is both effective and cost effective and
6 fair. And while I think nothing in life is perfect, I
7 think the staff has done a really excellent job of working
8 through all of these issues and coming up with a proposal
9 that is balanced, that is strong, and progressive in terms
10 of the impact that it will have on the air of the state,
11 but that also attempts to recognize the very legitimate
12 concerns of the industry and of the population of this
13 state that we not regulate anybody or anything in a way
14 that is going to make whole sectors of our economy suffer
15 as a result of what we're doing.
16 So I'm just tremendously uplifted by the quality
17 and the quantity of the analysis that's gone into this.
18 And although needless to say I'm not happy about the fact
19 that there are still people out there in the industry who
20 are not enthusiastic about this rule and who have grave
21 doubts about whether they're going to be able to comply, I
22 guess my own experience in this program indicates to me
23 that we're on pretty solid ground when it comes to having
24 something here that will be able to be complied with and
25 that will, in fact, be less expensive and more effective
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1 than we know, and that we've built fail safe provisions in
2 that would allow us to react quickly if we turn out to
3 have made any mistakes along the way or if life in some
4 way changes the calculations that we've made.
5 But having said all of that, I do think that
6 there is always room for some consideration of
7 improvements that have been recommended. And so let me
8 just quickly tick off the ones that were on my list. And
9 some of them we may be able to dispose of very quickly
10 because there won't be any real interest in pursuing them.
11 And others we may want to talk about it more.
12 So let me just start off. The first one was the
13 one that related to having a technology and cost review in
14 2009. Although one member of the public indicated that
15 they thought that 2010 was more appropriate and that we
16 wouldn't really know anything by 2009. But one way or
17 another, I think we need to clarify when and how we want
18 to hear back from the staff on this issue. So that would
19 be my first.
20 The second would be to adopt the SOON proposal,
21 the very well named SOON proposal, but to open it up to
22 any district that might wish to partake of this program.
23 The third was whether we wanted to come up with
24 some form of special treatment or consideration for the
25 ski industry.
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1 These aren't in any particular order, but that
2 was an issue that was raised.
3 A fourth was this issue of captive counties.
4 That term reminds me of when eastern European countries
5 were under the influence of communism were called captive
6 nations. It's really not a very good term. I think I
7 understand what it means. Anyhow, whether that needed to
8 be expanded to include some counties that would normally
9 be considered to be outside the scope of the rule,
10 particularly Toulumne. Toulumne was one that was
11 specifically added.
12 The adjustment in the language that would make it
13 clear that all nonprofit training institutes are covered
14 by the exemption. So that would not be just 501(c)(3),
15 but also 501(a) and (c)(5) and (c)(3) and (c)(6) and any
16 other provisions of the Internal Revenue Code that would
17 cover nonprofit training institutes. I assume that's a
18 given, but I think we need to actually act on it.
19 And the next one would be to expand the number of
20 hours that would qualify as limited service above the 100
21 hours that the staff had proposed, if that has any merit
22 that would justify adding to the exemptions there.
23 There's a concern or a question about whether we
24 would have the sufficient enforcement program without
25 adding in some specific provision about periodic spot
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1 checks or third party verification or some other program
2 for beefing up enforcement.
3 There's the suggestion that we separate the rule.
4 I think this is a surgical separation between the NOx and
5 the particulate matter aspects of the rule to facilitate
6 its being adopted in other areas.
7 And then last, but not least, in terms of the
8 regulatory proposal in front of us, would be whether the
9 Board wishes to continue to pursue some additional methods
10 of averaging or alteration of the compliance period as
11 proposed by CIAQC.
12 Are there any other specific areas that people
13 wanted to add? D.D. and then --
14 BOARD MEMBER D'ADAMO: I would just note the
15 South Coast proposal on the opt-in.
16 CHAIRPERSON NICHOLS: Oh, sorry.
17 BOARD MEMBER D'ADAMO: On NOx.
18 CHAIRPERSON NICHOLS: On the opt-in. Right.
19 Okay.
20 BOARD MEMBER D'ADAMO: And then I have an
21 additional -- on the report back, whether it's 2009 or 10,
22 I would also like to include enforcement on that. And I
23 think it goes without saying, but I'd like to say it
24 anyway. On the economic impact issue, to have a specific
25 report back on flexibility provisions. I think we've been
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1 told a lot today by staff about how flexible the rule is.
2 And I think we really need to see if that flexibility
3 plays out.
4 CHAIRPERSON NICHOLS: So you want that covered --
5 both of those things covered in the report. Okay.
6 Additional items? Yes.
7 ACTING EXECUTIVE OFFICER CACKETTE: Could I add
8 one thing? Is that in the 2009 time frame, Ms. D'Adamo?
9 Included in that review? Or that is a separate review
10 you're talking about?
11 BOARD MEMBER D'ADAMO: I think it would be
12 included within. But I would defer to staff. I don't
13 have a strong opinion on '09 or '10.
14 CHAIRPERSON NICHOLS: It should be one report.
15 ACTING EXECUTIVE OFFICER CACKETTE: I just wanted
16 to point out in our suggested issues there was one on
17 reviews back to the Board, which suggested multiple ones,
18 which suggests different years. I just want to be clear
19 exactly what you're asking.
20 CHAIRPERSON NICHOLS: From the Board, any
21 other -- yes.
22 BOARD MEMBER BERG: I believe there were two
23 other review dates that staff had talked about. One was
24 January 2013 or '14.
25 ACTING EXECUTIVE OFFICER CACKETTE: We had
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1 suggested that one in '13 that would focus on looking at
2 the progress to date in the initial years. Years '10,
3 '11, '12, for example, would be feedback the Board might
4 be interested in. And then one in 2017, which would
5 address the issue that wasn't raised too much here today,
6 but the ongoing question and uncertainty in many of the
7 industry folks' minds about whether they'll be Tier 4
8 equipment and whether there'll be enough of it if it is
9 available.
10 CHAIRPERSON NICHOLS: So that would be a separate
11 report.
12 ACTING EXECUTIVE OFFICER CACKETTE: Those were
13 the three we outlined in the supplemental document, and
14 they're sort of separate purposes.
15 BOARD MEMBER BERG: And then -- I'm sorry. There
16 was a couple of pieces of testimony from people that
17 wanted to be able to get full credit for equipment that
18 they -- Tier 0 or Tier 1 equipment that they got rid of
19 and did not replace with anything. And so they were
20 talking about getting full credit for the NOx and the PM.
21 And I think that's worthy of conversation.
22 And I would like to at least -- I'm very
23 concerned about the small revenue companies with large
24 horsepower and the small and medium-size companies and
25 this bonding issue and to make sure that we have taken
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1 that in consideration. It is going to be a large impact
2 if we have loss of equity and their balance sheets are
3 affected as well.
4 I think at least we should agree to see where we
5 stand in January of 2009 at a minimum. I don't have any
6 good solutions right now. But I'm very concerned about
7 it.
8 And then I just would like to clarify the early
9 credit for NOx and why not PM. And I think if we have a
10 discussion on the economics, I can bring up the particular
11 subjects I have.
12 CHAIRPERSON NICHOLS: Okay. Well, I'm open to
13 suggestions about how to proceed. I thought maybe we
14 could just go through these items quickly one by one and
15 deal with them.
16 BOARD MEMBER RIORDAN: And vote perhaps to
17 include in the main motion.
18 CHAIRPERSON NICHOLS: Right. That would be
19 appropriate.
20 So let's start out with the nature of the reviews
21 we're going to do and whether they're in 2009 or 2010. Do
22 we want to specify that in the rule? If so, does somebody
23 have a proposal they want to put out to have a vote on?
24 BOARD MEMBER LOVERIDGE: Just could I ask Tom,
25 what would make sense as far as you understand?
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1 ACTING EXECUTIVE OFFICER CACKETTE: Well, first,
2 I think most of these are typically covered in the
3 Resolution, not in the rule. If you just ask us to do
4 something, the Resolution covers it.
5 I think we favor all three reviews. Certainly,
6 it's more work. But you know, we have the same curiosity
7 that you do to make sure that things haven't gone astray.
8 And also we may be reporting back, you know, great
9 progress as well, which would be our hope.
10 So in that document I think we wrote down some
11 language that could be captured in Resolution. If that
12 sort of meets your need, that might be a way of --
13 BOARD MEMBER LOVERIDGE: The question was 2009 or
14 2010.
15 CHAIRPERSON NICHOLS: For an early assessment.
16 ACTING EXECUTIVE OFFICER CACKETTE: The 2009 --
17 the principle reason for the 2009 as I understand it would
18 be to make sure, first of all, that there's retrofit
19 devices available and verified.
20 CHAIRPERSON NICHOLS: Otherwise, there would be
21 people who have to comply --
22 ACTING EXECUTIVE OFFICER CACKETTE: There's
23 companies that can say I provide thousands of them and the
24 installations of the early ones have gone well, that kind
25 of thing.
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1 You also referenced the flexibility provision.
2 And I think if that means have people take advantage of
3 early credits as one of the flexibility provisions, we
4 would know that.
5 CHAIRPERSON NICHOLS: In 2009.
6 ACTING EXECUTIVE OFFICER CACKETTE: The other
7 flexibility, which is your Item Number 9, the compliance
8 interval, wouldn't have happened yet.
9 BOARD MEMBER LOVERIDGE: 2009.
10 CHAIRPERSON NICHOLS: Is everybody comfortable
11 with 2009?
12 BOARD MEMBER RIORDAN: Are you including the
13 bond? You wanted the bonding issue?
14 BOARD MEMBER BERG: No. On the reporting, I'm
15 just talking about exactly what Mr. Cackette was speaking
16 about for the report.
17 SUPERVISOR HILL: The question was January or
18 June?
19 CHAIRPERSON NICHOLS: The question was when in
20 2009.
21 ACTING EXECUTIVE OFFICER CACKETTE: Well, the
22 first report we get is in March 2009. And then the first
23 compliance date, at least pending the discussion on
24 compliance intervals, is March of 2010. So we could do --
25 CHAIRPERSON NICHOLS: Let's make it June.
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1 BOARD MEMBER BERG: May I just make a comment?
2 Here's my issue. These people -- what I'm hearing from
3 the industry is grave concern whether we are going to have
4 equipment that is going to be ready for them to start
5 complying with. And they have to comply in March of 2009.
6 CHAIRPERSON NICHOLS: '10.
7 BOARD MEMBER BERG: But they have to start
8 putting it on. They have to be ready and done for the
9 first interval in 2010. And if it isn't there, this Board
10 should know about that and take appropriate steps. And I
11 think it's a safety net. It's a safe gap. And I think it
12 should absolutely happen in January of 2009.
13 CHAIRPERSON NICHOLS: But they won't be getting
14 the report until March.
15 BOARD MEMBER BERG: But the report is from
16 industry saying where they are. I want to know where you
17 guys are in the V-dex, in the repowering. Do we have this
18 equipment, and what does it cost?
19 ACTING EXECUTIVE OFFICER CACKETTE: Well, in 2009
20 we'll be able to tell you what's verified. Are there more
21 than three, which is the current status quo. What types
22 they are. What a typical cost is. Perhaps what the cost
23 for some of the early action installations.
24 BOARD MEMBER BERG: The showcase.
25 ACTING EXECUTIVE OFFICER CACKETTE: Yeah, the
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1 showcase results. What we won't be able to tell you is
2 what larger number of people have paid for it in different
3 volumes, which we might not get until well into 2009.
4 BOARD MEMBER RIORDAN: I don't think that's a big
5 issue. It's the first part that's the important one.
6 ACTING EXECUTIVE OFFICER CACKETTE: We can do
7 that, whatever you want.
8 CHAIRPERSON NICHOLS: We're talking about
9 Resolution language. So I don't know we need a formal
10 vote, but I'd like a consensus on this.
11 BOARD MEMBER CASE: If I can ask for
12 clarification. As we get information coming back as to
13 the availability of the technology -- as one of the
14 testimonies we heard asks that ARB consider allowing
15 federally and internationally tested V-dex to be included
16 in that group. And I don't know your opinion on that.
17 But is it reasonable they be included in what those
18 technologies are?
19 I'm not clear on any constraints we'd have for
20 any verification. But we did hear testimony that there
21 are products that are out there that haven't been verified
22 here in California but have been verified in other
23 countries and areas of the world.
24 ACTING EXECUTIVE OFFICER CACKETTE: Right. A
25 little bit of a long story. I'll try to make it very
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1 short.
2 On the on-road rules, we have harmonized with EPA
3 on the testing that is required to demonstrate
4 verification. But there are other requirements that the
5 regulations you've adopted governing verification require.
6 So, for example, they require warrantee. They require
7 demonstration of durability. There's a standard that you
8 adopted which limits the amount of NO2 that a device could
9 put out. And those are things that EPA does not check on,
10 nor do international agencies. And so we at a minimum on
11 on-road, we have to add those on.
12 Some people have chosen that their market is New
13 York and they don't bother with it. Other people have
14 said the market is going to be California, so they come
15 here first or they going in parallel. In off-road, I
16 think we have some other differences regarding test
17 procedures and things like that that we're still
18 struggling to try to get more in line with.
19 But the point being, there will never be complete
20 alignment. There will probably be some devices that are
21 okay in New York and in Switzerland, like Beirt is one of
22 the verifying organizations there that will not available
23 here. Many of them they're referring to are lower
24 efficiency devices which we verify out here. But our
25 rules essentially don't allow them to be used. They only
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1 get reductions like 25 percent particulate, instead of the
2 higher 85 percent.
3 It's a complicated thing, but that's some of the
4 differences and why we don't have complete and why we
5 couldn't say at this point in time even though we've tried
6 that we can except EPA verification.
7 CHAIRPERSON NICHOLS: Okay.
8 BOARD MEMBER D'ADAMO: What I would like to
9 suggest, it seems that we have two levels of information
10 that we're going to need at the beginning. First of all,
11 before this program really gets kicked off, what's the
12 status on verification.
13 And Ms. Berg has spent a lot of time on this. So
14 I think we ought to defer to her suggestion. So I'm
15 comfortable with January '09 for basically technology
16 review and verification.
17 But then the other issues of economic impact,
18 flexibility, enforcement, we're not going to know that in
19 '09. So I would suggest sometime in 2010. So adding yet
20 another review. So we have technology in '09, 2010 of the
21 rest of the list, and then what you had recommended on
22 2013 and 2017.
23 ACTING EXECUTIVE OFFICER CACKETTE: I want to
24 check with staff for a second to see if they think there
25 is a particular date when they think we'll have more
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1 information on this.
2 CHAIRPERSON NICHOLS: I think basically the tenor
3 of this is the Board wants to keep an eye on this rule as
4 it goes out and not just wait.
5 ACTING EXECUTIVE OFFICER CACKETTE: Since the
6 first compliance date is March of 2010, I would guess that
7 what would work most efficiently for us would be able to
8 look at sampling of compliance reports and actual
9 compliance, perhaps a little field work, and then also an
10 attempt to contact individual fleets and say, okay, now
11 that have your toe in the water, what has happened? Has
12 there been particular difficulties and actual costs. To
13 do that probably means that a meaningful report would be
14 the end of 2010.
15 BOARD MEMBER D'ADAMO: I'm comfortable with that.
16 CHAIRPERSON NICHOLS: I see heads nodding. Okay.
17 So we're going to add some language to the Resolution,
18 which we will not attempt to craft here. But Mr. Jennings
19 has got it all and is going to make sure it's properly
20 reflected.
21 CHIEF COUNSEL JENNINGS: Along with the court
22 reporter.
23 CHAIRPERSON NICHOLS: Yes. Between the two of
24 you.
25 So that was our first item.
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1 Next we were going to talk about SOON and whether
2 we would use the South Coast language and also whether we
3 would open it up to any district that wanted to opt in.
4 Any comments from the Board? Yes, Mr. Roberts.
5 BOARD MEMBER ROBERTS: Well, when I first heard
6 this, I thought it was a good idea. And it seems to me
7 especially with respect to the larger air districts that
8 it offers an opportunity to actually accelerate some
9 things and incentivize those things.
10 And I would like to -- I don't know where you
11 want to draw the line, whether it's everybody that goes in
12 or maybe the larger more urbanized air districts. But I'd
13 like to see this as a more widespread option rather than
14 just in the two districts.
15 I also -- there was kind of suggested, although
16 I'm having trouble seeing -- there was some linkage
17 between this and the possibility of the different
18 increment. I didn't know if we should be discussing those
19 at the same time.
20 CHAIRPERSON NICHOLS: Did you want to comment on
21 that?
22 BOARD MEMBER RIORDAN: Just a quick question. I
23 did not hear, and so I don't know. Has this program been
24 adopted by the South Coast at this moment, the Board? Or
25 is this something that the staff has worked on and is
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1 going to propose?
2 ACTING EXECUTIVE OFFICER CACKETTE: I think --
3 BOARD MEMBER LOVERIDGE: The Administrative
4 Committee, which is in this case five members of the
5 Board, concurred with that today.
6 BOARD MEMBER RIORDAN: But it probably needs to
7 be blessed by the Board.
8 My point is I'm wondering if though in the
9 expansion, which I do support, but we better have a pretty
10 uniform program for these air districts. Because I can
11 see how you can juggle and twist and get some variations
12 that may not be in the interest of everybody having "the
13 level playing field".
14 So I don't know how to craft that, Madam
15 Chairman. But I certainly support those districts who
16 want to opt into something like this. I think it's a good
17 thing. I think it can help a lot of companies that may
18 need the additional assistance or can leverage money. But
19 I can also see some problems.
20 ACTING EXECUTIVE OFFICER CACKETTE: I think just
21 one comment is the way we've tried to structure the sample
22 language, which is also in your package, is to structure
23 in the sort of governance of how this would work would be
24 established by State regulation, your regulation.
25 What the options would be is whether you opt in
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1 and how much money you opt in and what happens if the
2 money you promised doesn't all show up. That has to do
3 with not requiring anybody to actually do the V-dex or the
4 modernization without having a substantial amount of
5 money.
6 There would be some -- I think there would be
7 some variance in districts because of the way they use the
8 Carl Moyer moneys and the matching requirements, which are
9 generally small. But there's some negotiation surrounding
10 the cost effectiveness calculations, which could be
11 different I guess in different districts. But in general,
12 it would be the same thing. And only the amount of money
13 would be different.
14 CHAIRPERSON NICHOLS: I was troubled by the
15 language that South Coast brought us for this very reason,
16 that what works as cost effective in the South Coast may
17 not be the same as what's cost effective in another
18 district that might want to opt into the program. And
19 before we go too far down the track of tailoring these
20 things for individual districts, this is really a big
21 breakthrough as far as I know for the Air Resources Board
22 in creating a two tier rule like this that gives us much
23 ability to local districts to implement a motor vehicle
24 control regulation. I very much want to see us move in
25 this direction. But I want to see us do it in a way
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1 that's going to succeed. That's really what I'm hearing
2 also from Ms. Riordan.
3 BOARD MEMBER BERG: Madam Chairman, is it
4 possible then to allow the definition of cost effective to
5 be defined by the individual local boards, that we set the
6 framework and allow what definitions they can fill in the
7 blank for?
8 CHAIRPERSON NICHOLS Well, as far as I'm
9 concerned -- this is just a personal opinion. I think
10 they can spend the money however they want to. It's
11 whatever priorities they have.
12 My only concern about this -- there are really
13 two. One is that we make sure the devices they're using
14 are, in fact, certified devices and that the emissions
15 reductions that are being claimed are real. Otherwise, we
16 don't have --
17 BOARD MEMBER BERG: And over.
18 CHAIRPERSON NICHOLS: Right.
19 BOARD MEMBER CASE: Madam Chairman, just one
20 other element. I think we should be supportive of this
21 expansion. I'm very mindful that there are a couple of
22 areas in our state that are really having difficulties and
23 are depending on black box technology in a big way because
24 it's allowed in the law. But it makes the public very
25 uncomfortable. And anything that can move forward that
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1 date of attainment for those that are severely out of
2 attainment I think would be a very large benefit to the
3 public.
4 So I think we need to be mindful of targeting our
5 resources to those who are most out of compliance and
6 working with the California State Legislature to make sure
7 this program is adequately funded. Because it is a
8 request to match dollar for dollar with local Moyer money
9 to really create a bigger opportunity for mitigation. And
10 it seems reasonable we should focus on wherever in the
11 state of California has the most severe problem that is
12 most likely impacting the most people.
13 So I think a piece of it is making sure we're
14 working with the State Legislature. I would like to see
15 this everywhere in California, because I think we will all
16 benefit. I'm mindful some areas face challenges that
17 other areas don't, and you have to really target your
18 money if you're restricted to the amount of dollars. So
19 how do we balance that becomes part of the question.
20 CHAIRPERSON NICHOLS: I wrote down communication,
21 cooperation about seven times. We can all just say that
22 to ourselves and try to make it so.
23 But based on this discussion, do you have a
24 recommendation for how we should deal with the language
25 proposal?
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1 ACTING EXECUTIVE OFFICER CACKETTE: Well, I think
2 first we need to know from you whether what Supervisor
3 Roberts was talking about, are we talking about urban
4 areas? Are we talking about Tehama County can do this if
5 they want? Probably not likely but --
6 CHAIRPERSON NICHOLS: I think it's not very
7 likely.
8 BOARD MEMBER RIORDAN: No, because small air
9 pollution control districts have very little extra moneys
10 to do a program such as this. You're talking big dollars.
11 CHAIRPERSON NICHOLS: I don't think we need to
12 worry about limiting it.
13 SUPERVISOR HILL: I would suggest that any
14 district that decides to do it would be the appropriate
15 way to go. Those that can't opt in, wouldn't. And I
16 think the language should be such it should be consistent.
17 CHAIRPERSON NICHOLS: And it gives them that
18 opportunity to make the decision. So we want to open it
19 up, I think is the answer. And we also want to make sure
20 that there's flexibility for the locals to define how much
21 money they're going to put in and what benefits they're
22 going to --
23 ACTING EXECUTIVE OFFICER CACKETTE: One thing I
24 didn't mention before is I think there's a way we have it
25 structured, there's a requirement for guidelines which the
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1 districts would adopt as part of their management of this.
2 And those guidelines would have to be approved by ARB.
3 And that would help make sure it's cost effective.
4 And I don't know if we need more language than
5 what's in the South Coast's approach on cost
6 effectiveness. If there's any flaws in this or things
7 that come up, I'll just ask if we could have the
8 flexibility after this to --
9 CHAIRPERSON NICHOLS: During the 15-day period to
10 make the minor adjustments. Is that acceptable to
11 everyone? All right. Great.
12 This is easy. Does anybody want to do
13 anything or do you feel satisfied we've dealt with the ski
14 industry's concerns for the time being at least?
15 BOARD MEMBER RIORDAN: You know, I would just ask
16 again -- I think we have the flexibility; correct? Am I
17 correct?
18 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
19 WHITE: Yes.
20 CHAIRPERSON NICHOLS: Yes. That answers that.
21 Captive counties, anybody want to do anything
22 about the rural counties that are --
23 BOARD MEMBER RIORDAN: Well, I think the issue
24 that was raised for Tuolumne -- and I would just like the
25 staff's opinion if there is some reasonableness to the
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1 request. I mean, believe me, I don't know. But maybe
2 there is some interest there to --
3 ACTING EXECUTIVE OFFICER CACKETTE: Well, I may
4 need some help from Erik on this one.
5 We did look at this with Blue Mountain Minerals I
6 think it was in Tuolumne County. We looked at some if we
7 included special provisions for counties like them, what
8 other counties would it bring in? It brings in quite a
9 few other mid- to small-size counties that have somewhat
10 severe or air pollution problems caused by transport but
11 also contribute to their own emissions. So our thinking
12 on this was more along the lines of no.
13 But let me ask if there are any other nuances for
14 your consideration.
15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
16 WHITE: No. I think that's a fairly safe characterization
17 of what our analysis was on that.
18 CHAIRPERSON NICHOLS: How about the language on
19 nonprofit training institutes? Is there any question or
20 concern about that? No. We're going to fix that. Okay.
21 How about the issue of whether that we want to or
22 need to expand the number of hours that qualify for
23 limited service? This is a way of dealing with this issue
24 about not so much the small firms, but the heavily
25 impacted firms that Ms. Berg is concerned about.
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1 ACTING EXECUTIVE OFFICER CACKETTE: First, I'd
2 like to ask the staff if they have any sense of what the
3 environmental impact would be if you made it 200 hours
4 versus 100. I don't know if we've looked at this.
5 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
6 WHITE: Yes. As part of the original assessment in
7 support of the May proposal, we did look at this. This is
8 an issue that came up numerous times through the
9 regulatory development process with some requests. And as
10 we looked at could we expand it to higher numbers of hours
11 a year, we started to see an erosion of the benefits that
12 the regulation would provide anywhere from a factor of two
13 to a factor of four reduction in some of the benefits as
14 we went to more hours.
15 One of the solutions we tried to craft in this
16 was to allow a three-year average around those. So that
17 would allow flexibility and fluctuation year to year for
18 fleets to allow for more use in one year, less in another
19 to try to address some of the concerns. But ultimately
20 raising a cap seemed to be the environmental --
21 CHAIRPERSON NICHOLS: Sacrificing too much
22 benefit from the rule. I didn't hear anybody pick up on
23 it. I just thought I should raise the issue, because it
24 was brought up in testimony and not something that staff
25 had addressed before. So I'm comfortable with leaving it
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1 as is, unless somebody wants to re-raise it.
2 What about we agree that we can write the rule in
3 a way that allows separation of the NOx and PM? I mean,
4 that's doable. Okay.
5 So then other issues that were raised about the
6 economic impact had to do with whether there was a way to
7 give credit for early retirement that's already taken
8 place of Tier 0 or Tier 1 and whether we should be giving
9 credit for early particulate matter in addition to NOx. I
10 think those are kind of similar issues here. They're
11 design issues with the program. But they deserve to be at
12 least answered I think.
13 ACTING EXECUTIVE OFFICER CACKETTE: Yes. And I
14 asked Erik to sort of give you the background, because
15 these issues have come up before.
16 CHAIRPERSON NICHOLS: This would be helpful.
17 ACTING EXECUTIVE OFFICER CACKETTE: There are two
18 issues. Go ahead.
19 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
20 WHITE: This is in relation to counting the replacement
21 with cleaner engines towards retrofit requirements.
22 We gave this -- again, this is another issue that
23 came up throughout the regulatory development process from
24 a number of stakeholders. And when we looked at are
25 there -- looked at the whole package in terms of what do
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1 filters provide in terms of environmental benefits. And
2 certainly I think we all clearly understand the mass
3 emission reductions they get the percent reduction off of
4 what's coming out of the engine. But we also tried to be
5 mindful of as we start to move forward and get into some
6 of the health effects of looking at the particles that are
7 coming out of the engine, and when you put a filter on an
8 engine, that filter effectively collects the particles
9 pretty much regardless of the size.
10 And one of the concerns that we had is although
11 you get some mass emission reductions from going from
12 let's say a Tier 0 engine to Tier 2 or 3 engine, neither
13 the Tier 2 or 3 engine still does not have a filter.
14 There was some concerns that as the data started to come
15 in on particles, that those types of engines may
16 preferentially produce ultra fine particles that there
17 would be no control device on that tailpipe to collect it.
18 So we had some concerns that we didn't fully understand
19 that. And to provide the credit for control that we knew
20 was going to come with the use of the filters versus one
21 that we were unsure of, that wasn't appropriate at this
22 time to grant that equivalency, if you will, for engine
23 turnover relative to retrofit.
24 ACTING EXECUTIVE OFFICER CACKETTE: A real bottom
25 line number is the engine controls have reduced the mass
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1 of particles, but not the numbers of particles. And the
2 filters are the only devices that really reduce the
3 numbers of particles and do it by three orders of
4 magnitude.
5 So if we give credit for the mass reduction
6 because they bought a newer engine. But without a filter,
7 I think we only get one of the two possible health-driven
8 impacts taken care of.
9 BOARD MEMBER BERG: But my understanding is what
10 we were looking at was early credit. And so in fact have
11 they contributed to less PM as a result of going from a
12 Tier 0 to a Tier 3?
13 ACTING EXECUTIVE OFFICER CACKETTE: They've
14 reduced the amount of mass, but not the number of
15 particles.
16 BOARD MEMBER BERG: Okay.
17 ACTING EXECUTIVE OFFICER CACKETTE: That's the
18 concern.
19 BOARD MEMBER BERG: And what about the issue of
20 retiring a Tier 0 and not replacing it at all or a Tier 1?
21 That came up in testimony.
22 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
23 WHITE: As we looked at that, we kind of did it on a mass
24 balance. In other words, the work is going to be done.
25 So if the vehicle was retired, I don't think there was an
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1 assurance that another vehicle that was equally as dirty
2 may not do that work.
3 And, you know, as we looked at some of our other
4 regulations that we have that deal with retirement, some
5 of the existing fleet rules, there are requirements that
6 to claim retirement credit in those rules, the vehicle has
7 to be destroyed or certified it's been shipped out of
8 state. In other words, any dirty replacement will never
9 come back in the state to replace that vehicle.
10 We don't have these same restrictions here. And
11 part of it is to provide the flexibility for fleets to
12 retire those vehicles and maybe another fleet may be able
13 to utilize that or has a use for that because they have
14 the resources to potentially clean it up in a way that the
15 original fleet didn't.
16 So we couldn't really structure a way to make
17 sure we were whole on the retirement action if we simply
18 gave them credit for a retrofit by moving that out that
19 somebody else wouldn't have another vehicle, purchase that
20 vehicle, or some other thing that might negate that
21 benefit that the retrofit would provide.
22 BOARD MEMBER BERG: I think what you're looking
23 at is companies that for one reason or another don't have
24 the funds to clean up that piece of equipment, so they
25 sell it. The rule clearly provides that you can't add
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1 Tier 0 to your equipment after 2009 or '10. Okay. So we
2 know no one is adding it to their fleet, because it would
3 show up on their inventory. And really, you're giving
4 them a choice of going out of business. There's no other
5 choices at that point. And I don't know that I agree with
6 that.
7 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
8 WHITE: Are we talking about before 2009 and --
9 BOARD MEMBER BERG: No. After. We're talking
10 about after 2009, after the inventory has been given that,
11 one of the options if you don't have the money to retrofit
12 or repower or buy a new piece of equipment, that you could
13 sell that piece of equipment, in effect reducing your
14 inventory. And it would be out of your inventory, and you
15 would get credit for that.
16 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: One
17 of the concerns in that is if you ended up with sort of
18 bogus counts of equipment -- in other words, if I wanted
19 to deal with a rule like this, I could, you know,
20 basically count stuff that's not running or barely running
21 and retire it and get credit for it.
22 BOARD MEMBER BERG: Well, people are going to do
23 that anyway. And there's nothing, I mean -- I don't think
24 we can prevent --
25 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: But
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1 the benefit they get from it changes.
2 CHAIRPERSON NICHOLS: You're giving an inventive
3 for people to game the system if you do it that way, I
4 think would be the concern.
5 This is a detail. Maybe it's a little late in
6 the day to be examining it. And I realize you have a much
7 more in-depth appreciation of some of the specific fleet
8 concerns that some companies may have.
9 But if you wanted to pursue it and if others
10 wanted to pursue it, I would favor looking at it in the
11 context of compliance as opposed to trying to amend the
12 rule at this point, unless somebody has an idea.
13 Yes.
14 BOARD MEMBER ROBERTS: I think we need to pursue
15 it. The only option is you have to destroy the piece of
16 equipment. And it seems to me we're putting in effect all
17 the rules that if they're working, we're not going to see
18 that equipment in California. And we're saying we don't
19 trust that. I mean, I think we need to deal with this,
20 because there's no option.
21 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
22 WHITE: This is purely in the context of retirement.
23 Retirement only in the context of turnover.
24 I think you're right in the sense that the
25 vehicle can't be added back in by another operator, that
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1 we wouldn't have that concern I was discussing. I was
2 thinking you were talking pre-2009.
3 CHAIRPERSON NICHOLS: In fact, there won't be any
4 market for this equipment in the state of California
5 anyway as I understand it.
6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
7 WHITE: As we've heard. I think in that context I think
8 it might be okay in that context and I haven't really
9 given that a thought in that way.
10 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS:
11 Because that's equivalent. We were hung up on the idea of
12 how do you get them to destroy it. But clearly if it's
13 not usable --
14 BOARD MEMBER BERG: It's not in any company's
15 best interest to load their inventory with Tier 0s.
16 There's no incentive to do that.
17 CHAIRPERSON NICHOLS Do you understand the
18 modification that's being suggested here and where it
19 would come in the regulation?
20 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
21 Ms. Berg, may I ask a question? So are you talking
22 about -- right now, for instance, say it's one of the
23 earlier years in regs and fleets are on the BACT path and
24 doing 8 percent turnover. So it's bad economic times.
25 The fleet is shrinking. Are you saying if they shrink
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1 more than 8 percent that we then give them credit towards
2 the 20 percent PM retrofits they would otherwise be
3 required to do for additional --
4 BOARD MEMBER BERG: No. I'm not talking about
5 the PM anymore. I'm just talking about the testimony that
6 was given that if financially a company decided that the
7 best way for that given year, because they didn't have any
8 money to do repowers or retrofits, that they sold a piece
9 of equipment that they did not replace. And that would
10 count then towards, you're right, their NOx and their PM
11 as if they had retrofitted and repowered it.
12 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
13 In lieu of the retrofits, they can do additional turnover
14 beyond the 8 percent?
15 BOARD MEMBER BERG: Not beyond; including. It
16 would be a compliance option to meet the 8 percent.
17 Because it wouldn't be polluting.
18 STAFF AIR POLLUTION SPECIALIST HEROY-ROGALSKI:
19 If we do that, we'd give up benefits.
20 BOARD MEMBER BERG: How?
21 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
22 Let's clarify. If they do retire a vehicle or designate
23 it low use, it does count towards the NOx portion of the
24 rule. It does count as turnover already. So the only
25 thing that would be different than what we have right now
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1 would be to then give them credit towards reducing the PM
2 exhaust retrofits they would be required to do.
3 BOARD MEMBER BERG: Because they would no longer
4 be using that piece of equipment, their inventory would be
5 lower.
6 IN-USE CONTROL MEASURES SECTION MANAGER BRASIL:
7 Correct. But the question is they still might have to do
8 20 percent of their remaining fleet. Are you suggesting
9 we say you would have had to do 20 percent, but you
10 retired 8 percent of your vehicles? Now you only have to
11 do 12?
12 BOARD MEMBER BERG: Correct.
13 SUPERVISOR HILL: We get the benefit either way.
14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
15 WHITE: What you're hearing from the staff is we're trying
16 to on the fly see how do the numbers work out. I don't
17 know that we have an answer right now.
18 The question is what would be the appropriate
19 credit to give for that action. Do you give -- you know,
20 is it equivalent to putting on a filter? Is it -- as
21 we've done with NOx, is there a partial credit that would
22 be provided? And what would that appropriate level be? I
23 think we can go back and look at that so that we stay
24 whole on the benefit side, but recognize that action.
25 BOARD MEMBER BERG: But mathematically to me, it
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1 would be equivalent to and you actually would gain more
2 benefit, because a filter does not give you 100 percent
3 benefit. And not having that piece of equipment in their
4 yard is 100 percent reduction.
5 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
6 WHITE: Now it's been clarified to me. Under the
7 regulation, you would do the 8 percent turnover and then
8 do on top of that the 20 percent of the filters. And that
9 8 percent turnover, while it is intended to get NOx
10 reductions, it does bring along PM reductions with it.
11 And that's where -- and as I was just reminded, that's the
12 reason why there's two actions there that get PM benefits.
13 And what we're saying by doing the one action it's going
14 to count towards both. That's where we may come up a
15 little bit short. We'll need to go back and maybe we can
16 look at what the appropriate level is so we stay whole on
17 it. I think we can certainly do that.
18 CHAIRPERSON NICHOLS: Can we agree then -- I
19 really want to be able to vote while we've got everybody
20 here, and I know we may lose some people.
21 Can we agree that the staff is being directed to
22 add a compliance provision that gives equivalent
23 recognition -- and I know you're going to be honest about
24 how do you the calculations -- to the rule as it's
25 currently envisioned for retirements of equipment? That's
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1 the direction. Okay.
2 BOARD MEMBER RIORDAN: And I'm assuming this is
3 permanent retirement, because you can take out equipment.
4 We've always said you can take it, park it, and save it
5 for another day. But this is a permanent retirement.
6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF
7 WHITE: Yes. We will go back and see if we can make that
8 work.
9 CHAIRPERSON NICHOLS: Good. We've earned our pay
10 here.
11 All right. Let me just quickly move on through
12 the rest of this then. Actually, that may be the last of
13 the issues.
14 BOARD MEMBER BERG: I think the final one, Madam
15 Chair, is the compliance to triennial.
16 CHAIRPERSON NICHOLS: The three-year versus one
17 year.
18 ACTING EXECUTIVE OFFICER CACKETTE: We have a
19 quantification for you. If we can put it up on the
20 screen, you can look at it.
21 CHAIRPERSON NICHOLS: There's also a three-year
22 NOx issue for the South Coast compliance.
23 ACTING EXECUTIVE OFFICER CACKETTE: I think, as
24 we understand it, that one would be part of SOON. Unless
25 you want to change that.
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1 CHAIRPERSON NICHOLS: If you're in SOON, you get
2 to do now and get the benefits that would give you,
3 whatever they are --
4 SUPERVISOR HILL: Madam Chair, the three year is
5 just for the SOON Program?
6 CHAIRPERSON NICHOLS: Yes.
7 BOARD MEMBER BERG: And there's no discussion
8 about discussing whether the three year is an appropriate
9 period? Any will to discuss that?
10 CHAIRPERSON NICHOLS: Well, I mean, that was what
11 South Coast was proposing. I don't --
12 BOARD MEMBER BERG: I know what South Coast was
13 proposing. Is there any will on the Board to discuss
14 whether industry, who is going above and beyond and
15 saying, yes, we'll be part of the SOON, but we need this
16 flexibility, is there any discussion?
17 CHAIRPERSON NICHOLS: I think three years is a
18 lot myself. I wouldn't feel comfortable going any further
19 than that.
20 BOARD MEMBER ROBERTS: I wouldn't feel
21 uncomfortable. You talking about initial three years?
22 BOARD MEMBER BERG: Yes, I'm talking about one
23 three-year period.
24 BOARD MEMBER ROBERTS: Not the proposal to keep
25 going?
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1 BOARD MEMBER BERG: Yes. Just one three-year
2 period at the very beginning of the rule from 2010 through
3 2013 to get us into the rule and allow industry that
4 three-year period to get started.
5 CHAIRPERSON NICHOLS: Well, you can give us the
6 numbers of what the benefits are that we'd be sacrificing.
7 ACTING EXECUTIVE OFFICER CACKETTE: Can you see
8 them on your screen?
9 CHAIRPERSON NICHOLS: Yes. I think that is what
10 we're talking about.
11 ACTING EXECUTIVE OFFICER CACKETTE: What we have
12 is the third row is what we analyzed, and that was CIAQC's
13 proposal as of yesterday I think it was or day before,
14 which was 40 percent in the second year of a three-year
15 window and then full compliance in the third year. No
16 requirement in the first year.
17 And they had it pegged to start at 2011, and we
18 said that's tantamount to a delay of the reg for one year.
19 We added into our analysis 2010.
20 And so we have 100 percent compliance in the
21 first year, the first interval, and then the first
22 three-year interval starting. In 2010, you'd have to
23 comply. In 2011, you wouldn't necessarily have to do
24 anything more. In 2012, you would have 40 percent of the
25 total required in the next year. And then in the final
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1 year, which would be 2013, you'd have to be in full
2 compliance. So then it would start over again, unless you
3 did what you were just discussing about limiting it to one
4 window.
5 That was a 12 percent lose of benefit that we --
6 and these are PM benefits in 2015, which is the target
7 year for PM2.5 compliance. That's why we picked that
8 analysis. Then there was some discussion floating around
9 today that the industry did not agree to the 100 percent
10 in 2010. And they thought 20 percent in 2010 would be an
11 appropriate substitute. So that's the second row going
12 up. That shows a 16 percent lose in benefit.
13 Then going into the discussions when we were
14 still trying to seek a consensus among all the parties,
15 the original proposal of CIAQC was just three years and
16 only have to demonstrate compliance in the third year.
17 And we were saying that that had a big impact on air
18 quality. And so we came up with the idea, well, what
19 about if you have to do at least 80 percent, but we're not
20 going to make you do 100 percent in the interim years.
21 So, you know, that is sort of like an annual
22 compliance, but it's essentially a possible relaxation of
23 the standard for two out of the three years by 20 percent.
24 And that got 3 percent reduction in benefit, but the
25 indications we had is that CIAQC was not at all
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1 comfortable with that. Their members would not support
2 it.
3 CHAIRPERSON NICHOLS: And the thing to remember
4 about all of this, folks -- and I know you do and I know
5 we're all here trying to accomplish the same results. But
6 my going-in tendency is always to look for flexibility on
7 the compliance side if it saves industry money and doesn't
8 cost you much of anything in terms of the air quality
9 benefit. Because it just makes everything so much easier.
10 And there are no guarantees about 100 percent compliance
11 in anything we do, realistically.
12 But when you're talking about numbers like 12
13 percent or 16 percent, then you're talking about levels of
14 control that we're not going to be able to make up in
15 other places. I mean, the fact is that meeting the PM2.5
16 standards is going to be a very, very challenging and
17 expensive operation. So however difficult this is, it's
18 going to get more difficult as we look at other rules.
19 BOARD MEMBER ROBERTS: Help me, because maybe I'm
20 not understanding this. When you get to the third year,
21 you have full compliance. So the 12 percent is 12 percent
22 of the cumulative to that point.
23 CHAIRPERSON NICHOLS: It's what you've lost in
24 the interim.
25 ACTING EXECUTIVE OFFICER CACKETTE: It's what you
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1 lost in the interim. Let's use one of the BACT off-ramps.
2 You have to do 20 percent filters per year. So in a
3 three-year increment, with no restrictions, you can
4 arguably do none in the first year, none in the second
5 year, and 60 percent in the third year. This is
6 hypothetical. And in those first two years, you get no PM
7 reduction.
8 So the health effects add up the, lost health
9 effects. In the third year, you've accomplished what you
10 would have done in the third year. And there's no loss of
11 health effect. So there's a loss in year one, year two --
12 BOARD MEMBER ROBERTS: Once you get to that third
13 year, that percentage as a percentage of any subsequent
14 years goes down.
15 ACTING EXECUTIVE OFFICER CACKETTE: No. It
16 doesn't make up.
17 BOARD MEMBER ROBERTS: It isn't made up. But
18 it's a small part now in an ever smaller part of your
19 cumulative.
20 CHAIRPERSON NICHOLS: But you're never going to
21 get back the impacts on the people who had to breath
22 dirtier air during the first two years.
23 BOARD MEMBER ROBERTS: I understand. But we're
24 down to talking about some very, very small percentages
25 and as you go past that --
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1 ACTING EXECUTIVE OFFICER CACKETTE: The
2 percentages are what's up there. We showed the graph
3 before of what's the cumulative line and the difference
4 between one and --
5 BOARD MEMBER ROBERTS: If I took the impact out
6 to the year 2018 or the year 2020, that number would go
7 down.
8 ACTING EXECUTIVE OFFICER CACKETTE: In cumulative
9 terms, no, it wouldn't go down. It would tend to approach
10 as isentrope and stay there. It would be --
11 BOARD MEMBER ROBERTS: But the 12 percent would
12 have to go down, Tom.
13 ACTING EXECUTIVE OFFICER CACKETTE: On a yearly
14 basis, yes.
15 BOARD MEMBER ROBERTS: That's what I'm saying, on
16 a cumulative.
17 ACTING EXECUTIVE OFFICER CACKETTE: What you've
18 lost in the first two years under this, you've lost.
19 People have been exposed. And whatever the health effects
20 are, they are.
21 BOARD MEMBER ROBERTS: I think I understand that.
22 Okay. But if you were to graph that out is what I'm
23 saying, that percentage as you accomplish more and more
24 would become a declining percent. You're picking kind of
25 the point of where it's at a maximum. Three years later
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1 it's going to be a much smaller percentage. And three
2 years after that it's going to be a smaller percentage.
3 DEPUTY EXECUTIVE OFFICER SCHEIBLE: But the
4 proposal was to have repeating three-year periods.
5 BOARD MEMBER ROBERTS: But if I'm listening to
6 Sandy, and I thought she said one three-year period. See,
7 I would agree with you. But your analysis is based on
8 that, but that's not what she's saying. And I think the
9 numbers are misleading.
10 CHAIRPERSON NICHOLS: It wasn't analyzing that
11 question.
12 BOARD MEMBER ROBERTS: No. As we're discussing
13 it, she just said --
14 CHAIRPERSON NICHOLS: Right. But it's not on the
15 chart.
16 BOARD MEMBER ROBERTS: I'm trying to discuss what
17 I heard.
18 CHAIRPERSON NICHOLS: It's not on his chart.
19 BOARD MEMBER ROBERTS: You may not have the
20 number. But the number clearly once you get to that
21 year -- because you have full compliance when you get to
22 that year.
23 CHAIRPERSON NICHOLS: Understand.
24 BOARD MEMBER BERG: The other thing with the SOON
25 Program is the industry is making a commitment to do more
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1 than the benchmark. So they can't put off until year
2 three. And I'm just comfortable saying they have to do 40
3 percent by the second year. But I just think going into
4 this thing that the flexibility is an important issue.
5 BOARD MEMBER CASE: Can I ask for a point of
6 clarification, because I've gotten a little confused?
7 I think, if I'm understanding, do we have two
8 different conversations here? One is the regular
9 regulation that is currently on an annual cycle versus
10 consideration for the SOON Program, which is a whole new
11 effort to reach a level of clean air that's much higher
12 than the original proposed regulation. Am I understanding
13 that correctly?
14 BOARD MEMBER LOVERIDGE: SOON is NOx, too.
15 ACTING EXECUTIVE OFFICER CACKETTE: All of the
16 discussion in the graphs we've been showing you are based
17 not on the SOON Program, but on the Base Program.
18 BOARD MEMBER CASE: My understanding is this
19 question was coming up in regards to the SOON Program.
20 BOARD MEMBER BERG: Now we're talking about in
21 regards to the regulation. The overall regulation.
22 BOARD MEMBER RIORDAN: And giving flexibility the
23 first three year, as Ms. Berg said. But following that,
24 it would be the same as the regulation is proposing. So
25 you have to go back to that --
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1 ACTING EXECUTIVE OFFICER CACKETTE: Look at 2012
2 and you can see what the cumulative lost lives from the
3 first -- health benefits from the first three years if it
4 was a one-year increment. And I think beyond that, the
5 lines would be absolutely parallel.
6 BOARD MEMBER ROBERTS: Well, they should start to
7 go together I would think.
8 ACTING EXECUTIVE OFFICER CACKETTE: That's
9 cumulative, so they don't ever go back together. What
10 that means is that there would be no more --
11 BOARD MEMBER ROBERTS: But it's not 12 percent.
12 ACTING EXECUTIVE OFFICER CACKETTE: In this
13 chart, it's whatever it is in 2012, which looks like maybe
14 7 percent or something.
15 BOARD MEMBER ROBERTS: That's the point I was
16 making from a percentage basis. But, yeah, they would
17 graph out parallel. But on a cumulative basis, it's going
18 to be a much smaller number. And that's the point I think
19 we were trying to make was that you -- while you have some
20 initial impact, that impact is over --
21 CHAIRPERSON NICHOLS: You know, we've been
22 sitting here dealing with every different possible groups
23 and their concerns. And I'm going along with you really
24 emotionally and every other way with all of those
25 compliance, flexibility issues you've talked about for
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1 small fleets or especially impacted people.
2 But now we're talking about something that would
3 apply to every single fleet, regardless of their cost of
4 compliance or regardless of their ability to comply,
5 simply giving up three years worth of control, or at least
6 a good two years worth of control to give the extra
7 flexibility. And I think it's a questionable --
8 SUPERVISOR HILL: Madam Chair, I would agree with
9 you, and I would support the original recommendation. I
10 think that's the direction we should go.
11 CHAIRPERSON NICHOLS If you want to make a
12 proposal to amend the regulation to deal with the extended
13 compliance period, I would entertain that motion and we
14 can vote on it.
15 BOARD MEMBER BERG: I'm hearing that there isn't
16 the votes to -- I put it on the table, Madam Chair, for a
17 discussion like we did those other things. Am I seeing
18 that there's enough discussion to put a vote on?
19 CHAIRPERSON NICHOLS: Well --
20 BOARD MEMBER RIORDAN: Well, I think that's the
21 way to solve the problem, to test it.
22 BOARD MEMBER BERG: I'll move to include the
23 triennial compliance for the first three years of 2010
24 through 2013, one-time window.
25 CHAIRPERSON NICHOLS: Is there a second?
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1 BOARD MEMBER ROBERTS: First, I think you have to
2 add to that that's with -- we don't have the numbers up
3 here. There were a number of options. That's with 40
4 percent.
5 BOARD MEMBER BERG: With the 40 percent
6 compliance at the end of the second year. Thank you, Ron.
7 BOARD MEMBER ROBERTS: And no additional
8 three-years period?
9 CHAIRPERSON NICHOLS: Yes.
10 BOARD MEMBER ROBERTS: I would second that.
11 BOARD MEMBER D'ADAMO: I have a question of staff
12 on local air district plans. And if we can bring that
13 chart up again. I'd like to understand the impact this
14 would have on in particular South Coast and San Joaquin
15 Valley on PM. I just don't recall the dates, the PM dates
16 for compliance.
17 ACTING EXECUTIVE OFFICER CACKETTE: Well, they
18 have to -- for the PM standard, they have to demonstrate
19 their clean air in 2014 for a 2015 attainment date. So
20 that's what's sort of driving this whole discussion is how
21 much PM can you get in those five years.
22 BOARD MEMBER D'ADAMO: I would say then -- and I
23 really appreciate Ms. Berg, because she has spent so much
24 of her time on this.
25 And I do favor flexibility. But I feel compelled
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1 to oppose this, mainly because of the attainment
2 demonstration. And I just know because Supervisor Case
3 and I have spent a lot of time on this and we're going to
4 try to squeeze more out of the reductions than we already
5 have. So reluctantly I'll be opposing it.
6 BOARD MEMBER CASE: I would concur with the same
7 element. When you look at the health impacts of
8 particulate matter, we've dealt with PM10. But really
9 when you look at the studies, PM2.5 is so much more
10 significant from a health perspective that it embeds
11 itself much deeper in the body in terms of causing damage.
12 So any exposure to that over any period of time is more
13 troublesome than any even PM10.
14 The other piece is as people are so exposed to
15 air pollution and we're struggling with making those
16 findings for ozone and the San Joaquin Valley -- and many
17 people are very frustrated with the timelines because the
18 technology doesn't exist. I just don't see how we can
19 support not getting at least particulate matter. We have
20 many challenges with ozone. And the bottom line is it's
21 very, very damaging to the lungs. So I'm in agreement.
22 I like to support industry. I believe it's
23 really important. But to have a healthy population, you
24 also have to have a healthy economy so we have the
25 resources. But to go there and expose people, I can't
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1 support that at this time.
2 CHAIRPERSON NICHOLS: Excuse me. We have a
3 motion and a second. We're having discussion now. I'll
4 call on you next and then --
5 BOARD MEMBER RIORDAN: I just want to remind the
6 Board with the motion that's before us, at the end of the
7 three years, you're going to be at the same point with a
8 minor variation that you would have been with the
9 regulation that's before us.
10 I think this does provide flexibility and takes
11 into consideration the air quality because we're getting
12 to the same end point. And as Supervisor Roberts pointed
13 out, when you look at it over a long term, it becomes a
14 very small number in the whole scheme of things. But
15 you've allowed some flexibility to an industry that's
16 really got to come up with a lot of effort in those first
17 few years. So that's why I'm supportive of the motion.
18 CHAIRPERSON NICHOLS: Additional comments? Yes.
19 BOARD MEMBER LOVERIDGE: Supervisor Case really
20 made the same point I would make. We've declared a
21 virtual emergency in South Coast in PM 2.5. And we're
22 doing all kinds of things to bring attention to it, bring
23 extra resources. And to vote to extend and increase the
24 amount is something I just can't do at all. I think the
25 South Coast Board would be appalled at that kind of
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1 choice.
2 CHAIRPERSON NICHOLS: I think if there are no
3 more comments, I'll ask the Clerk to call the roll.
4 SECRETARY ANDREONI: Ms. Berg?
5 BOARD MEMBER BERG: Yes.
6 SECRETARY ANDREONI: Supervisor Case?
7 BOARD MEMBER CASE: No.
8 SECRETARY ANDREONI: Ms. D'Adamo?
9 BOARD MEMBER D'ADAMO: No.
10 SECRETARY ANDREONI: Supervisor Hill?
11 SUPERVISOR HILL: No.
12 SECRETARY ANDREONI: Mayor Loveridge?
13 BOARD MEMBER LOVERIDGE: No.
14 SECRETARY ANDREONI: Supervisor Roberts?
15 BOARD MEMBER ROBERTS: Yes.
16 SECRETARY ANDREONI: Mrs. Riordan?
17 BOARD MEMBER RIORDAN: Aye.
18 SECRETARY ANDREONI: Professor Sperling?
19 BOARD MEMBER SPERLING: No.
20 SECRETARY ANDREONI: Chairman Nichols?
21 CHAIRPERSON NICHOLS: No.
22 SECRETARY ANDREONI: The motion defeated.
23 CHAIRPERSON NICHOLS: Very good discussion. I
24 appreciate the intentions of everybody who spoke on both
25 sides of this one.
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1 We're now at the main motion. I think the rule
2 is before us at this point, and it's time to act.
3 Do we have need to call the roll on this one, or
4 can we do a voice vote on the main regulation? All right.
5 I would ask for your aye vote then. All in favor
6 please say aye.
7 (Aye)
8 CHAIRPERSON NICHOLS: Any opposed?
9 Thank you. The motion carries unanimously.
10 Thank you.
11 CHIEF COUNSEL JENNINGS: Chairman Nichols, just a
12 short comment on process. We have a court reporter here,
13 and she's going to be able to a put out the transcript
14 within ten days normally. That will be posted on our
15 website.
16 I'm confident that looking at the transcript
17 we'll be able to translate your action into a text for the
18 Resolution. And we'll make that available as soon as
19 possible after the transcript is posted.
20 CHAIRPERSON NICHOLS: Thank you.
21 Thanks, everybody. We will be adjourned until
22 tomorrow morning. Good work.
23 (Thereupon the California Air Resources Board
24 recessed at 6:34 p.m.)
25
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